The prospect of finding the ideal home or apartment is daunting on its own, but add on top of that the pressure to pick the right neighborhood to live in, and you’ve got yourself an anxiety-inducing set of decisions to make.
If you’re new to a city, choosing a neighborhood can feel overwhelming, but even longterm residents can struggle with this when it comes time to buy. Would-be homebuyers may have a neighborhood they love, but with the rising costs, they often find themselves priced out of familiar territory. The budget-minded buyer wonders: What areas can I actually afford? Which ones will be a good investment? And where will I (and my family) be happy?
Making a good fit in your neighborhood choice requires research. “There are both qualitative and quantitative factors,” Constantine Valhouli, co-founder of the real estate research Boston-based firm NeighborhoodX told Curbed in 2017. “The numbers will never tell the full story on its own, but the anecdotal doesn’t tell the whole story either.”
Buyers should prepare to study every number they can get their hands on including, asking and selling prices and the neighborhood’s absorption rate (don’t worry, we’ll explain what that is below!). You’re also going to have to pound the pavement to see what’s actually happening IRL—like the new coffee shop on the corner or the state of the local bus line. Here are a few tips to help the intrepid homebuyer find the neighborhood to call home.
Start with an open mind
Try not to rule anything out before you get started. A neighborhood you may have disliked on a visit could be a great place to live, or a corner of the city you previously thought was the end of the earth might actually be closer than you think, if you take into account an express bus.
Understand your budget
Knowing your budget may seem like a given, but in the early excitement of the home-buying process, it’s easy to lose site of your financial constraints. You’ll want to work with a broker and a mortgage professional to pick apart your income so that you know exactly what you can afford. Once you’ve settled on down payment and purchase price, a good broker can help you identify the neighborhoods that match your budget.
Study local pricing
Once you’ve ID’d some neighborhoods, analyze the current and past pricing in apartment buildings and homes around the neighborhood. Most brokerage aggregation sites, such as Zillow and Trulia, show a price history of properties.
“You really only need to look at pricing over the past two or three years,” Kenny Bellini, a broker who specializes in emerging neighborhoods across Los Angeles told Curbed. Don’t just look at the average sales prices of neighborhoods; analyze price appreciation for recently sold properties, as well as how much properties are selling over or under asking. Ask local brokerage firms to email you market reports, which often break down these numbers quarterly.
Check the absorption rates
Another number to dig into, through real estate websites or local brokers, is a neighborhood’s absorption rate over the past year. Absorption rate represents the pace of the market and is comprised of the number of sales and the listing inventory. To calculate the monthly absorption rate, take the total amount of listing inventory in a neighborhood and divide it by the number of sales in the month. The final result will show you whether sales activity in the neighborhood is cooling or heating up. Absorption rate represents what the market “feels” like, and this is a more important trend than price.
Trace the path of neighborhood growth
Rising home values is often a game of proximity. People and businesses priced out of one neighborhood will likely move to the next closest and more affordable neighborhood—and the cycle begins again. So if you can’t afford your dream neighborhood, check nearby areas in close proximity; if the adjoining neighborhoods are still too high, look to the next express stop out, if that’s relevant in your city.
“If you look down on a map in a city like Chicago, you see how the city grows from the inside out,” says Bellini. He notes that in less-dense cities, like Los Angeles, you can pick out “pockets” between popular neighborhoods that offer good bets for rising home values, such as Del Rey, between Venice and Culver City.
Consider the gentrification question
If you’re concerned about contributing to gentrification, there are ways to research that question before moving in. Do a search to see if there’s an active anti-gentrification movement or even just a substantial amount of chatter about it on a local Facebook group. Then, consider the implications of your impact on the neighborhood, especially if you don’t plan to live there long term. For a deeper dive on the gentrification issue, check out this story from Curbed LA, which is part of the site’s first-person series on buying in Los Angeles. (Pssst...It has a great section on how not to be a good neighbor in a gentrifying city, too.) Balancing the needs of your budget with the needs of a community is key to everyone’s happiness and quality of life.
Assess the existing amenities
One major factor to consider is access to public transit, whether that be a train, bus, or bike lane. Another is access to greenery and open space, whether that comes in the form of a local park or a short walk to a waterfront; if there are children in your family or might possibly be in your future, check out the local playground options too. A neighborhood with a mix of residential streets, community gardens, and commercial corridors is a good sign, too. More affordable neighborhoods won’t always boast fully-formed commercial strips, but existing grocery stores, local restaurants, and yes, coffee shops, are usually a sign that there will be more to come.
Pay attention to the details
You’ll pick up a lot just by visiting the neighborhood. Walking, shopping, and talking to locals in neighborhoods you’re considering will help you decide if it is a good fit for you and your family.
If you believe you’ve settled on a neighborhood, then take the research to the next level. For example, to gauge how reliable the public transit is, try taking it during your normal commute hours (both to and from work). Scour the local news source—including Curbed, if we’re in your city—to see if there are any big municipal projects planned in the near future and to find out if the city shared any plans to invest in parks or green space in the neighborhood. Also look for news about any plans to rezone the area to accommodate new development. Are there existing school boards, block associations, or community boards, and what are their concerns?
Don’t be fooled by statistics
You may be tempted to refer to existing crime statistics, but you shouldn’t take those numbers as the end-all, be-all. “Crime stats don’t tell the full story,” Valhouli says. “A New York City police chief once said that if you want to make the crime in a neighborhood go down, you just reclassify a misdemeanor as a citation.” Instead, ask for local input—from existing homeowners, business owners, and brokers—to get a better picture of safety concerns in the neighborhood.
Research the schools
If there’s any chance that you’ll be sending children to the local public schools, do some due diligence on the schools. Leah Wiseman Fink, a former public school teacher and founder of Classes At, a parenting community in Brooklyn, cautions parents not to get too fixated on a home’s zoned school if your kid is still in diapers.
“Zones change all the time,” she says, noting you could be rezoned before your child starts kindergarten. Fink also doesn’t put too much stock in scores either. She says the best thing you can do is tour the actual schools to get a feel. Meeting local public school parents is also great, but you can also do some sleuthing online; for example, there may be a Facebook group dedicated to schools in your prospective neighborhood where you can hear (and ask!) about people’s individual experiences.