With Buffalo’s economy rebounding, demand for good quality housing in the city is rising. While some of that is being filled by the steady flow of loft apartments and downtown living being supplied by local developers, low taxes and low prices are also attracting those looking for more solid family houses.
Buffalo’s West Side, in many ways reflects the city itself. Once an active and prosperous inner suburb, had gradually declined year by year since the 70’s. That is, until slowly at first a few years ago, a shift began to take place. The change came on two fronts.
Firstly, middle class creative bootstrappers began to realize that they could buy a house for pennies, not so different from the trendy but expensive Allentown next door, and began picking upand renovating the big old wooden houses in the neighbourhood. At the same time, the area, for whatever reason, became thehub for the new wave of immigrants to the city – refugees from Burma, Sudan, and other parts of SE Asia.
This influx of two very different types of upwardly mobile incomer has had an overall positive effect. House by house, street by street, ‘white settlers’ have been stealthily (but now more confidently) moving west from affluent Richmond Road, which generally sets the boundary between‘nice’ Allentown/Elmwood’ and the now edgy, cool ‘West Side’.
Houses get rehabbed, streets look better and are safer, gardens and small plots are worked, and prices rise, as well as rents. Drug dealers, and crack dens are, slowly but surely being pushed out as the new residents are more organized/capable than the old in the fight against crime in their adopted neighbourhood. The refugees, too, with far fewer means than the local creative middle classes moving in, have the same interests as the incomers – good schools, safe streets, pleasant environment.
So who benefits from this and who loses?
Sure, increasing rents and increasing prices are great for landlords like us – the gentrification process is a key issue indeciding where to buy. And as momentum builds in the west side and the perception of the area changes for the better, then a positive cycle begins and the gentrification continues, until, like in Hackney, East London (where I built my first business) the lawyers and accountants move in and the process is complete.
The first people to ‘lose’ – i.e. to be pushed out the area in the process, are publicly funded families, i.e. section 8 and welfare. They simply cannot afford the rents any more and move, family by family to cheaper neighbourhoods. This is good for the rest ofthe city, creating demand, and debateably good for landlords, too, focusing the supply for different levels of the market, encouraging higher quality landlord rehabs (i.e. you should renovate to a better quality if you’re expecting white collar/corporate tenants instead of welfare mums, because you’ll be getting much higher rent).
The next ones to go, perhaps would be the refugees who didn’t quite make the upwardly mobile step. I can see every sign of ambition from the refugees locally – unlike in UK they’re encouraged here to start businesses and begin contributing tothe economy from day 1, and many can’t wait to do so. But there will come a time, sadly, where the rents and prices become too high for some, which will either put a ceiling on the rents, or more likely push some families east to new areas.
After this, it’s the mainly white middle class creative boots-trappers who could be priced out of the market as real middle class professionals move in (‘if I live here with all these bohemians, then surely people will think I’m interesting?’ said the accountant to his mirror). By then, the gentrification process is complete, and unless you want a low risk, low return investment, its time to sell.
All in all, socio-economic groups being ‘pushed’ out of one area and into another because of affordability is a good thing for landlords. The trick is to be in early, while the process is ongoing and picking up momentum.
Buffalo’s West Side is reflecting the cities resurgence, and has a good five years of upward momentum to go, now critical mass has been reached and the area has visibly improved over recent years, even months, as the rehabbing army cleans, paints andscrubs its way to becoming an attractive place to live and work.
Author Alan W. Findlay is a Partner in Abbotsinch Capital with more than 15 years of experience in real estate investment. You can contact Alan to discuss investment opportunities in Buffalo via E-mail: firstname.lastname@example.org or by phone: +44 (0) 20 7193 2079.