Thursday, November 7, 2013

YoChicago: Price risks in buying into third-tier neighborhoods

Late last month I posted about a foreclosure rehab for sale in Chatham. Then I see Joe Zekas' post at YoChicago discussing the four-tiers of Chicago neighborhoods:
The first tier consists of the neighborhoods that have long been stable, sought-after and are either near the lakefront or far from it with good public or parochial schools, e.g. Lincoln Park and Edison Park.

The second tier includes neighborhoods that have changed rapidly in the last 20 years and have become trendy places to live, e.g. Bucktown, Lincoln Square and Andersonville.

The third-tier neighborhoods are where people are willing to gamble on a near-term (5 years or less) advance to second-tier status, with a corresponding increase in livability and, perhaps, some price appreciation.

Fourth-tier neighborhoods, which include far too much of Chicago, are hardscrabble places where people only move when they either can’t afford a better place or moving to one would take them out of their personal comfort zone.
Of course there is more to it than that. Zekas especially focuses on buying into third-tier neighborhoods. No matter how to slice it real-estate is a risk. One must buy property where they can afford it and then hope that some money can be made. It makes you wonder what it takes for a third-tier neighborhoods into a second-tier neighborhood.

Now I know about brought up the house for sale in Chatham. I really did want to ask where does a neighborhood like Chatham lie, but as stated in that earlier posting here it still worth investing in real estate in that neighborhood.

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