Priced out of this market?
(or so you think)
by Jim Scott

Housing prices and rents continue to spiral upwards even though we are in rocky economic times. History shows that a soft economy acts as a damper on prices and rents and the Federal Reserve Board has cut short-term rates five times since New Year's Day. Given the above, we should be in buyer nirvana. But the perception, particularly among some sellers, is that we are still in a strong seller's market.

Buyers need to realize that they now have a brief window of opportunity. The problem of slowing sales lies not with pricing but with the attitudes of buyers and sellers. Buyers have good opportunities if they adjust their expectations and think outside the box. Sellers need to temper their expectations, at least for the next six to nine months.

If you are looking to buy in the urban core and have been frustrated in your search for that charming urban home, the best values in this marketplace are in some fringe areas that will improve rapidly over the next five years.

There is life outside of Mission Hills Two observations may illustrate my point. First, I am struck by the explosive popularity of residential real estate in Little Italy and El Cortez Hill. These former fringe areas of the downtown core languished for years, at least from a real estate perspective. Today these neighborhoods are being gentrified at an electrifying pace. Downtown is completely on track for complete redevelopment. Put another way, the substantial rejuvenation of the downtown core is already priced into the real estate.

The renaissance of downtown has been partially responsible for the huge increase in property values within the 92103 zipcode. As the stockbrokers say, the stock is fully priced.

My second observation concerns a photograph taken in 1944, recently given to me by my mother, taken on the front lawn of a house on Hamilton Street in North Park. The scene behind the toddler revealed another time; an era before our city leaders decided to strip mine North Park. In the picture's background I saw gracious prewar cottages fronting on well-kept lawns. I recently went to that spot where I stood some 56 years ago and surveyed what I consider to be urban wreckage-perfectly serviceable but ugly post war boxes containing the denizens of the lower half of our economic order. Wandering over to the commercial hub at 30th and University, I noted that 99-cents stores have replaced family department stores. That means residents with less money have replaced people with more. And so it goes.

There are more than a few common threads. Yes, I know North Park and Normal Heights will never be Little Italy, but I am convinced those neighborhoods have the potential to be something a lot better. Our past city leaders allowed both areas to suffer in order to enable suburban development. They got lucky downtown thanks to Ernie Hahn, the microchip and the legions of displaced eastern urbanites.

What will save North Park and Normal Heights will be a new wave or urban pioneers. I know those buyers are in the mix. Over the next few years I would look to see the stock rundown rental homes slowly fade away. The resulting higher neighborhood aggregate income will change the face of 30th and University.

None of this will occur overnight but I think the process is well underway. It really started in the mid-1980's but got sidetracked by the brutal recession 1991. Middle class tenants abandoned the area in droves-some by choice but some because they sensed the neighborhoods were becoming very different.

Ten Years After

If you doubt the future viability of these older urban neighborhoods, drive the length of Georgia Street. There you will see the future of North Park and perhaps in the longer term, Normal Heights. I know there are still plenty of mean streets left in those neighborhoods, but I think their days are numbered. The only thing that will derail the process will be short-sighted decisions by City planners or a serious recession. We have been given a second chance by the grace of our economy, future energy shortages, Interstates 5 and 15 and by the price of prime urban real estate.

I am convinced it will happen. I have been in this business long enough to remember how awful the Gaslamp District was and I can remember when the regular fare of the Guild Theatre was X-rated films. It was not that many years ago that going downtown below Market Street was a fool's errand. Neighborhoods can and do change and frustrated buyers should give these areas a second look.

You can reach Jim Scott at his office, conveniently located in the heart of Mission Hills, at 1111 Fort Stockton Drive. Scott & Quinn is the oldest full service real estate firm in Mission Hills and is still locally owned and operated. Jim has been a homeowner in Mission Hills since 1976. He is married and has two boys. He can be reached at 296-9511. Scott & Quinn features professional property management as well as a sales division with 12 sales associates.