There’s no denying that the housing market, like with anything, ebbs and flows. In some cases, these changes can be tied to factors like fluctuations in crime rates or school systems, but most of the time these changes are brought on by improvements in the actual product – the properties – themselves. As we’ve seen across the country, and as is happening quite notably in certain areas of the Washington, D.C. region, one of the factors that impacts the housing market the most is simply supply and demand. As younger professionals move into cities and suburbs to start their careers and families, they may find that they’re either priced out of the more desirable areas or that there simply isn’t any real estate inventory available in well-established neighborhoods. This is where investors come in...
As real estate investors begin to notice that certain areas are seeing significant movement in home transactions, these neighborhoods begin hitting their radar as potential investment opportunities. They’ll take a look at properties that are available – either through regular residential sales, foreclosures, or land sales – and begin plans to renovate (or fix and flip) properties or build new construction in the area. And as this happens, big changes can take place.
When new construction goes up in an area, or old homes are rehabbed, it draws new buyers into the market, and these buyers often have specific ideas about the places they’d like to live – certain amenities such as coffee shops or parks may be a draw, or perhaps they’re fond of the proximity to public transportation. Either way, as the population diversifies and changes in these neighborhoods, so too does the aesthetic. Improvements on properties will provide an increase in property taxes for the municipal government, as will the introduction of any grocery stores or shops that decide to hang their shingle in the newly “hot” area. These additional funds then tend to lead to improvements first in school districts and safety, and then in infrastructure (such as road paving projects or intersection redesigns).
In Washington, D.C. there are three areas that have seen incredible growth in recent years thanks in part to real estate investors coming in, renovating and flipping houses or developing new real estate opportunities, and helping to make the market more enticing to home buyers. The Columbia Heights neighborhood, for example, had seen nearly 320 home transactions by mid-September of last year alone. That’s quite impressive for a neighborhood that, when all is said and done, takes up less than one square mile of space! Similarly, Eckington has seen a major boom in condominium developments in response to an incredibly high demand and real estate investors have been more than happy to oblige. In August 2016, it was reported that a total of 4,300 units would be in development which is pretty intense for an area that’s barely 10 city blocks wide. Finally, since the market crashed in 2008, the Petworth neighborhood has seen steady, uninterrupted, and significant market growth across various market segments, from one-bedroom condos to four-bedroom row houses as the area has become more desirable to home buyers due to easy access to public transit and close proximity to both Howard University and The Catholic University of America.