Housing? Go downscale

[Warpy]

If you're looking to buy a home in one of the hottest city neighborhoods, think downscale. Less-affluent areas such as Watts in Los Angeles saw the greatest appreciation from 2003-2005.

One might think that the bulk of that appreciation came in wealthy and well-known enclaves like Beverly Hills or Bel-Air. But according to a Forbes.com ZIP code analysis, within the Watts ZIP of 90059, home prices rose 91.9%; more than any other ZIP in Los Angeles. Forbes.com looked at the top and bottom ZIPs for each of 20 U.S. cities, and that put Watts at No. 7 on the list of ZIPs with the greatest appreciation. Meanwhile, had you sunk your funds into the upscale neighborhood of Holmby Hills, you would have the least amount of appreciation in the city -- under 9% from 2003 through 2005.

It is a pattern that held true in several of the largest cities in the U.S. over the past two years. Long-coveted areas, such as Pacific Heights in San Francisco, Buckhead in Atlanta or the Upper East Side in New York, were not the best performers. Instead, in many metros, neighborhoods with lower median incomes, neglected housing stock and low prices, or areas that were dominated by office or industrial space, have surged forward.

http://realestate.msn.com/buying/Articleforbes.aspx?cp-documentid=388211>1=8012

I'm posting this for folks who find themselves able and ready to get into the housing market. I've seen my own place appreciate about 120%, most of it within the last three years, and it's in a part of town known as The War Zone.

One thing driving this is the fact that the real estate in these areas has been chronically undervalued. Another is that downscale areas tend to be the most convenient in terms of services available and commuting time to work.

Friends thought I was nuts when I bought this house in this area. It's nice to be vindicated in print and on paper.

[NMDemDist2]

1. it works well for folks who don't have to be concerned about schools

I'd think.

DH and I are definately looking in the "downscale" areas of Carlsbad and Roswell. We'd rather pay cash, do some repair/remodeling and keep some $$ in the bank than have a mortgage. I think since we'll have the option to do the work ourselves, we can get a lot more square footage and land for our money too.

[Sammy Pepys]

2. That's because there's more room to appreciate in price....

Same thing goes with my area....Washington D.C. Gentrification has caught on big time. Places that no one wanted 10 or 15 years are scooped up, refurbished and turn a tidy profit.

I know a guy who owned a couple of rowhouses in NE, where most neighborhoods could be considered downscale. He bought both of them for $23,000 total in 1986 or '87, and never even rented them or anything...they kind of just sat (he was going to convert them into offices or retail or something, but spent most of his capital buying the property and never followed through).

He just sold the whole mess for $800,000....it was enough for him to retire on.

[400Years]

4. sweet

[Betsy Ross]

3. We did just that 8 years ago.

While we paid at least 30% less than a similar property in a "better" part of town, our home now has equal value. This was an obvious no-brainer as we bought in the area near a recently closed Naval base. So many beautiful, turn-of-the-twentieth century homes just looking for owner inhabitants. We also bought a small three-bedroom we turned into a two-bedroom with a great master bedroom and a beautiful guest room. This was only possible because of a partially finished basement that houses all of our messes!