Future Neighborhoods: Great Buying Opportunities

Soho was once one. So were Tribeca; Venice, Calif.; and Philadelphia's Old City. These former gritty neighborhoods once offered low-cost housing for artists.

These neighborhoods grow, adding art galleries, coffee shops, hip little boutiques, and cool restaurants. Property values in turn increased to the point where many of the original artists found themselves priced out. Eventually the artists moved on in search of new bohemian blocks, but for the classy home buyer, keeping an eye on where artists live can be a great way to get in early before a market takes off.

The reason is that artists are happy to move where real estate investors aren't prepared to go—crime-infested inner cities with trashed-out apartments, inside rat-infested buildings.

Artists aren't looking for the next hot neighborhood, just large, affordable spaces where they can hammer, saw, and generally make a racket in the name of creativity. But they often set the stage for redevelopment, and home buyers who follow their lead can sometimes get in while real estate prices are affordable.

Urban Areas in Change

Over time, the abandoned warehouses artists occupy become gorgeous lofts and studios, and gritty neighborhoods transform into trendy communities with an edge. That's when the investors, developers, and wealthy buyers arrive, pushing up rents and displacing the artists who are then forced to set out for the next undesirable neighborhood. It's a cycle that has repeated itself for decades, in cities across the nation.

"When artists go to a certain neighborhood, that's a really strong sign for investors to come in," said John Villani, author of Art Towns California, a book that will be published next month by The Countryman Press, a division of W.W. Norton. "They're the ones who were there first and tend to be first to be pushed out also. It's really kind of a discouraging cycle for a lot of artists. They feel used and manipulated by forces bigger than them."