It is a natural desire to make the most of your money when you're investing it on a home. So perhaps you're very tempted to buy a house in an up-and-coming neighborhood instead of looking out for a home in a high-profile community.
You may have liked a beautiful neighborhood with a few older houses that are being gradually refurbished. Some offices have opened there and a few popular food chains are opening new branches in that area. You've even a found a good school for your children in that neighborhood. So, all in all this is an emerging neighborhood and you would love to have a house there.
The recent sales data shows that the price of homes has increased by 10% in the last one year. This is certainly a clear sign of an up-and-coming neighborhood but don't rush to buy a house fast. Before you start thinking about mortgage and downpayment, weigh the pros and cons to make the best decision of your life.
Pros
Here are the upsides of buying house and living in an emerging neighborhood.
1. Buy house at less price: A trick to reside in a good neighborhood is to buy the worst house on the block. This helps you buy a house without stretching your budget. Play the same trick when you want to get an entry in an up-and-coming neighborhood. You can get a house that perfectly fits your requirements at a much less price than what you would have to pay in a coveted area.
2. You can live near a big city: Have you always dreamt to live in a big city? Well, it costs a lot to buy a house or an apartment in a big city. Moreover, you may not have the required cash for it. So, what do you do? Give up your dream altogether? Obviously not. Just modify the dream little bit. Buy a house in an emerging neighborhood (that is very near to your favorite city) with your available funds and drive into the city whenever you want. You can catch all the action in the city without paying a heavy price for it.
3. You can sell at a good price: The area where you bought your house has not yet caught the attention of the home-buying public. You can renovate your house and enjoy good value appreciation. This will help to increase your profit margin when you eventually sell the house.
4. You'll have cool neighbors: One of the plus points of emerging neighborhoods is that you'll see plenty of hip and cool people there. You can say that these people are the first products of gentrification. If you love eating out at new restaurants, promoting independent business and checking out the latest trends, then this place is just right for you.
Cons
Emerging neighborhoods have several downsides too. Here are the 4 problems you may encounter.
1. The schools may not be top-notch: Are you planning to have kids soon? Do you have toddlers already? Well, then a good school must be in your priority list when you're analyzing a neighborhood. Gentrification leads to development in schools too. However, the standard of the school may not have improved as per your expectation right now. So, your kids may not get all those facilities that they used to get in their previous school.
2. The price may have escalated too fast: Remember, you're not the only one who wants to buy a home in an emerging neighborhood. There are thousands of proactive homebuyers in the pipeline. So, if you're one of the last people to discover the neighborhood, then the price of homes may have increased hell of a lot already.
3. It may have a high crime rate: Up-and-coming neighborhoods may have higher crime rate than other places. Modernization and development can reduce the crime rate in future. But the neighborhood may not be that safe in the near term. You've to think if you're interested to stay in a place that may not be too safe.
4. It may not develop as per expectation: Some neighborhoods look promising but eventually they don't develop as per your expectations because of various reasons such as lack of funds in the local government. It may remain as it is now. Moreover, it takes time to develop a neighborhood. Can you patiently wait till that time? Will it be too risky for you? Calculate the risk before making the biggest investment of your life.
Conclusion
Emerging neighborhoods have a community spirit. You may find like minded people there who want to bring an overall development of the place. They're interested to help each other and work together to develop the place fast. However, there are a few downsides too. If you can overlook them, then an emerging neighborhood can be the best place to live in.