How an 'Up-and-Coming Neighborhood' Left Buyer Down and Out
These days, hipster" or "up-and-coming" neighborhoods are basically buzzwords for a good investment, but there can be another side to the story. We asked one woman to share her tale. Her identity, the neighborhood and the city she bought in are left out of the story to respect her privacy and the privacy of the neighborhood residents.
"You're going to love this neighborhood. It's really up and coming!" You know how they say "if it's too good to be true, it probably is?" Well, I learned that hard way when I bought a house in a neighborhood with uncertain prospects.
I did love the house, but I knew for sure I'd never set foot in that neighborhood before. That should have been my first warning sign. From there, things just went too smoothly. I easily got the financing. I%VIRTUAL-pullquote-I bought the house because I thought I was investing in a neighborhood that was about to be my dream "place" in my city of choice.% looked at a map and realized this house in the "up-and-coming neighborhood" bordered a section of town I loved and knew well. And the price was unbeatable.
So, I moved in. What I didn't realize at the time was that I was essentially gambling with my home equity. If the neighborhood didn't improve, neither would the value of my home. My real estate agent made a lot of claims. "A florist!" "A coffee shop!" "Health care across the street!" "A new gym!" Her insiders had told her all these things were in the works, and if I moved in now, I could be the lucky investor in a newly refurbished neighborhood.
As you may have guessed by now, this isn't exactly how it turned out. The six years I spent in that house were actually pretty good. I loved the layout of the house and the fact that I could see the city skyline out the kitchen windows. Eventually, I got to know a few of my neighbors and even count them as friends. There were spots in this "up-and-coming" location that I did grow to enjoy, but they were all things that were already there before I bought the house.
The awesome shops that the agent said were "just about to go up" never went up. The gym never opened its doors. And the clinic we were told bought the land across the street never closed on the property. Oh, and the coffee? I had to bike two miles to the closest one. So while I was up in the neighborhood, nothing was definitely coming anytime soon. When I needed to move, I realized I gambled with this home and lost. I was easily $20,000 under water and prices in my neighborhood had gone down since I moved in, despite the fact that I had spent thousands on improving the place while I was there.
Blame the recession. Blame tough financing for new construction or the city council. It doesn't really matter. Ultimately, I blame myself. I bought the house because I thought I was investing in a neighborhood that was about to be my dream "place" in my city of choice. I bought into a dream that was never going to happen.
It's fun to dream of living in the perfect neighborhood before anyone else. It's even better to imagine the payday you may get from selling a home in said neighborhood. But beware of rhetoric. Most awesome neighborhoods don't happen in a year or two. It takes decades for that kind of cultural evolution. Next time, I'm buying a house in the neighborhood I love instead of waiting for the fantasy to come true.
I'll do the following things before signing on the bottom line. Lessons learned:
1. I wish I'd had more frank conversations with my agent about the likelihood of these new establishments. I didn't question the "insider information" at all. I wish I pushed my agent a little more to find out exactly who these sources were and how likely the change would be.
2. If I were to do it again, I'd think more about the neighborhood as it is today rather than how it may be in five years. If I knew the neighborhood wouldn't change, I probably wouldn't have moved in. Always weight your options and ask yourself, if the neighborhood didn't change, would you be okay with it?