3 Signs a Neighborhood May Be in Trouble

January 11, 2019

How can buyers determine if a community is a good fit for them? Sure, they should walk the neighborhood and make visits at various times of the day. Realtor.com® recently interviewed housing experts to identify signs that a neighborhood could be on the brink of a decline. Here are some of those possible indicators:

Three for sale signs in a row

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Several houses are on the market.

Two or three homes for sale in close proximity is OK, but more than that could be an indication that something is wrong. “This points to illiquidity in the market and pricing pressure, which is a risk for buyers,” Alison Bernstein, founder of the Suburban Jungle, a real estate strategy firm, told realtor.com®. That said, a neighborhood could be seeing more For Sale signs because it’s rapidly gentrifying and longtime residents are finally looking to move on. But if there are several For Sale signs up on a block, home shoppers may want to do some digging to find out why.

School enrollment is falling.

In healthy communities, schools often see steady enrollment. “Shrinking class sizes are a red flag,” Bernstein told realtor.com®. If enrollment in local schools is trending lower, it might be wise to investigate. Is it because parents are fleeing to charter or private schools? Are residents staying put longer as their children grow up?

Nearby storefronts are empty or leaning industrial.

“Be mindful of any kind of commercial influence on the block, such as close gas stations or anything that could be undesirable health-wise,” says Ralph DiBugnara, vice president at Residential Home Funding. Also pay attention to the amount of vacant retail space. “Empty storefronts can tell you a lot,” Bernstein says. “They point to less disposable income of residents than clearly there once was.”