The 10 Hottest Neighborhoods in 2013

“You’re probably well past up-and-coming once a Starbucks moves in,” says Peter Tatian, senior research associate in the Urban Institute, a Washington think tank. Yoga studios and even dog parks are other anecdotal indicators that affluent homeowners and renters have begun to gentrify a neighborhood, adds Tatian.

Click here to see the 10 hottest neighborhoods in 2013

Of course, Tatian, along with Realtors, homebuyers and homesellers look to another objective test of market interest in a neighborhood. If housing prices shoot up sharply on a year-over-year basis, the odds are that supply is constrained yet demand is high. The neighborhood has turned a corner.

The trick is to buy into a neighborhood while it is on its way up and before it has fully turned a corner. 24/7 Wall St. asked Trulia, a leading supplier of home listings, to provide us with a list of the nation’s 10 up-and-coming urban neighborhoods as measured by yearly price changes in cities. Home prices in most of these area are still considerably lower than other already established neighborhoods in their cities.

Up-and-coming sounds promising, but it may strike many potential homebuyers as a bit risky. Take a neighborhood called Anacostia in Washington, D.C. Wikipedia refers to it as “infamous” for its high crime rates, which is not a compelling real estate reputation. Tatian says that the neighborhood was one of several areas that lost population in recent decades and had some vacant lots. “In older eastern cities there’s some constraints so you have to increase the density of residents per acre to get more people in — and some places are doing that,” he says.

In other words, Anacostia was primed for redevelopment. The median price per-square-foot was $132 in 2012, up 14% over 2011. A historic neighborhood may be on its way back — thanks mostly to a rise in jobs. “That’s one of the many reasons why the Washington area has been growing so quickly,” says Tatian, “it’s because we have a lot of jobs here, generated by the federal government and things related to federal employment.”

An area such as Anacostia may also benefit from federal laws aimed at priming the local economy. A recent Washington Post piece stated that the neighborhood is a “Historically Underused Business Zone,” which could help local business “gain preferential access to federal procurement opportunities.” And, as you might expect, rents in the neighborhood are “a fraction” of what they are elsewhere in the District, according to the Post.

Just as an urban neighborhood can spiral out of control when unemployment and crime erode the quality of life and torpedo housing values, a neighborhood comeback can take on a life of its own. “It’s a bit of a feedback loop — where something positive happens and causes somebody else to come in and open a business,” says Titian. “But [the recovery] doesn’t always work out that way. It is risky.” His favorite example of a neighborhood comeback is “Columbia Heights [in Washington, D.C.,] which has established itself as a very desirable neighborhood — and it’s very expensive now — whereas 10 or 15 years ago it was much more affordable.”

These are 10 up-and-coming neighborhoods for 2013.

1. South Park | L.A. Live
> City: Los Angeles, Calif.
> Median price per foot, 2012: $476
> Percent change since 2011: 26%

On paper alone, the South Park area of Los Angeles does not seem like it’s about to stage a comeback. According to stats provided by the Los Angeles Times, it is one of the densest and poorer neighborhoods of L.A. But the adjacent “L.A. Live” commercial development, anchored by the Staples Center, is turning things around quickly. A marketing campaign for South Park states that “over 30 restaurants, nightclubs and entertainment locations are within a 10-minute walk.”

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2. Stonestown | Lake Merced
> City: San Francisco, Calif.
> Median price per foot, 2012: $422
> Percent change since 2011: 9%

In the southwest corner of San Francisco, tucked between the Pacific Ocean, a freshwater Lake Merced and the local zoo, sits a windswept series of residential developments on land that was once simply sand dunes. There’s a stately 1950s suburban look to much of the housing in the neighborhood, but young families may be drawn to the area’s easy access to public transportation, shopping and some of the city’s better public schools. Local data shows that residents are paying more to live in Stonestown than in many other parts of the city.

3. Lawton Park
> City: Seattle, Wash.
> Median price per foot, 2012: $276
> Percent change since 2011: 14%

Lovely Lawton Park is a high income, low density gathering of 30-somethings who seem eager to live in this charming area where many of the homes were built before their parents were born. There were fewer homes for sale in this neighborhood in 2012 than there were in 2011, according to real estate listing aggregator Redfin, and the inventory constraint helped buoy prices. The average home in this neighborhood sold for $480,000 in November, according to Redfin.

4. Crown Heights
> City: New York, N.Y.
> Median price per foot, 2012: $272
> Percent change since 2011: 26%

Crown Heights is considered an up-and-coming Brooklyn neighborhood, with a signature street fair. But it has a ways to go before making a strong economic impact on the borough. Consider that both the median income and the median rents paid by residents of this 1.9 square mile area were below borough-wide averages. With a standard house going for $595,000, according to Trulia, residential prices are attractive by New York standards.

5. Dorchester
> City: Boston, Mass.
> Median price per foot, 2012: $205
> Percent change since 2011: 18%

Few neighborhoods in America can trace their roots to the 1600s or claim the distinction of holding the first town meeting in this country. This somewhat densely populated part of Boston has had its economic ups and downs over the centuries and now solidly lags the rest of the city in household income. Still, rents are low in ‘Dot,’ as the area is known, and there’s easy access to public transportation throughout the area. At $289,482 for an average listed home, according to Trulia, it’s easy to see why interest is building in living in this community.

6. Historic Anacostia | Fort Stanton
> City: Washington, D.C.
> Median price per foot, 2012: $132
> Percent change since 2011: 14%

This neighborhood along the shores of the Anacostia river is staging an economic comeback — not so much for what it is doing but because the District of Columbia is itself undergoing a strong revival fueled by federal government spending and jobs. And homes are cheap. Trulia reports that the median sales price is $170,000 in this historic neighborhood.

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7. Home Park
> City: Atlanta, Ga.
> Median price per foot, 2012: $131
> Percent change since 2011: 16%

Home Park, a neighborhood known for housing Georgia Tech and Georgia State students, not surprisingly has both higher resident density per acre and lower income than much of Atlanta. At a $158,000 median home sales price, according to Trulia, the area offers reasonably priced homes. An edgy blog called Not For Tourists says that with the construction of a new bridge, Home Park becomes “Atlanta’s next up-and-coming area.”

8. East Mount Airy
> City: Philadelphia, Pa.
> Median price per foot, 2012: $127
> Percent change since 2011: 12%

Mount Airy, split into East and West areas, is known as one of the more successfully racially-integrated neighborhoods in America. Home prices are rising sharply on a year-over-year basis, and only a small amount of inventory is available according to Trulia. The New York Times recently lauded the appeal of the neighborhood’s attractive home prices and ‘socially-conscious’ lifestyle.

9 Northeast Dallas | White Rock
> City: Dallas, Tex.
> Median price per foot, 2012: $77
> Percent change since 2011: 50%

Prices in the Northeast Dallas and neighboring White Rock area are rising quickly. Inventory in the market is low. The area offers lower resident density per acre and higher incomes than much of Dallas, and yet, at $293,000, the average priced home is fairly affordable. According to Walk Score, a service that rates the “walkability” of neighborhoods across America, people in Northeast Dallas are basically “car dependent.”

10. Northside | Northline
> City: Houston, Tex.
> Median price per foot, 2012: $69
> Percent change since 2011: 30%

The mostly Hispanic Northside/Northline area is an attractive place for young couples seeking to buy a home and raise a family. The median sales price is $59,000, according to Trulia and rents are also lower in this neighborhood than the city as a whole. Other bargains abound: a number of homes in the neighborhood are in some stage of Foreclosure.

Rusty Weston

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