Breaking news: Gentrification is back, declares the Wall Street Journal, as it singles out Dallas’ Bishop Arts in a December 15 story chronicling the various cities and neighborhoods “coming back”, racking up serious money for brave urban pioneers.
“It’s all part of this cultural shift toward living in urbanity, getting things in an urban area you can’t get in the suburbs,” says Paris Rutherford, a Dallas-based developer who works on urban revitalization projects. “And that’s obviously driving a lot of new investment all over the country.”
Wait, who is Paris Rutherford?
He’s president at Catalyst Development, with offices in Highland Park Village. He’s worked at Woodmont Investment Company/Icon Partners, RTKL Associates and Media Five. And he’s a Harvard grad who lives in the Park Cities.
What he says is spot on, and Bishop Arts certainly is the epi center of development/growth in the Oak Cliff area. Has been for a while. On my to-do list is the story of PSW Real Estate, an Austin-based company building brand new sustainable, solar-paneled homes about a stone’s throw from Bishop Arts: $320,000 for 1700 square feet!
How do you ID a neighborhood on the verge of re-gentrification? In other words, how to buy cheap and sell for a hefty profit, with housing values rising over the long term? For years I have heard that the Oak Cliff area is such a place where this real estate magic happens in Dallas.
Surely you’ve seen our Tuesday $200,000.
So I asked an investor, who asked to remain anonymous, probably because of the money he has made flipping homes here. First home, bought ten years ago, rehabbed, sold and pocketed $60,000. So much of it is a matter of timing; the market sucked from 2007 to 2012. On his second Oak Cliff area home he made $125,000 in about a year, as did his sister down the street. What’s the secret to buying right in Oak Cliff?
“Keeping your ear to the ground,” he told me. “Just like you do in the Park Cities, or anywhere. Whose moving? Who has died? Look in the bathroom cabinet for dentures.”
Teeth in the bathroom, that’s a new one.
Experts say to look at the surrounding neighborhoods for the “halo” effect” –
That’s what Stan Humphries, chief economist at Zillow (and a really great guy) uses to describe the way property values tends to diffuse or migrate from one thriving neighborhood into surrounding areas. Like a halo! This is kind of real estate 101 – if you cannot afford the best neighborhood, buy in the next best abutting it. Humphries told the WSJ “there is a “much higher probability” that a neighborhood will improve in a lasting way if it’s in the halo of an already prosperous one.”
Well, except for San Francisco’s Tenderloin neighborhood.
I was with Cindy Beatty today of Keller Williams Urban, who all but owns Sparkman Club northwest of Preston Hollow. Sparkman is so hot, homes fly off the shelves once they hit MLS and this is having a halo effect on the neighborhoods surrounding Sparkman, she told me, including Chapel Downs.
You can also check out the local retailers. Check what type of wine are they selling, jugs of Chianti or fine wines? Obviously an influx of pricier shops means homeowners with the means to spend bucks in those shops are nearby. There’s a reason why there are so many high end grocery stores from Northwest Highway to Forest Lane on Preston in Preston Hollow: three Tom Thumbs, Central Market, Whole Foods, and Natural Grocer.
Retail is one of the more visible reflections of other, less apparent signs of gentrification, such as an increase in median household income, says Jed Kolko, chief economist at online real-estate marketplace Trulia Inc.
Conversely, when the high-end retailers start closing shop, as they did at Victory, that could mean a decrease in household income because local homeowners are not buying. A cute chocolate shop may be nice, but how long has it been around?
By the way, Zillow now has an “index” to identify a neighborhood’s economic health. As does Trulia.
The article found a Dallas guy named Jon Daniel, a manufacturing rep, who says he moved to Oak Cliff right before his youngest child’s high school graduation, moving to a 1925 Oak Cliff duplex, escaping a “soul crushing” Dallas suburb. This despite Oak Cliff’s rap for poverty and crime. We have friends who moved back to the peripheries of Lakewood as soon as their kids sprung the nest. Another story on my to-do list: Mike and Becky Casey’s move to Oak Cliff from Highland Park. All of these people shunned new McMansions for homes with character, like this Wynnewood master bath. Attractive housing stock, they say, is crucial.
“You need a neighborhood that has good bones,” says Jonathan Butler, who founded Brownstoner, a website dedicated to the real-estate market in Brooklyn, N.Y.
Here’s another tip: in an area that’s truly gentrifying, home prices will be appreciating at rates above the city’s average. And look for a stable relationship between the sale price for homes and rental rates. Inflated home values relative to rentals could be a sign of wild speculation. Unfortunately, there is not a large MLS for rentals, so this is where your handy Realtor comes in. They should know rental rates as well as sales prices.
And the really good ones know which bathrooms have dentures sitting in the medicine cabinet.
Bishop Arts is old news — what other parts of Dallas are experiencing the gentrification that started in Oak Cliff years ago? East Dallas along Haskell? Ravinia? The Dallas Design District? Trinity Groves?