Help me understand why there's a 100k plus neighborhood in a war zone

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Help me understand why there's a 100k plus neighborhood in a war zone

Omar Gutierrez
Duncanville, TX · Member since 2014 · 24 posts · 6 votes

So I drove through an area called oak cliff (complete war zone in dallas) and I came across a small neighborhood called encino hills. This area has 100k houses but what surrounds it is a complete run down of houses and commercial properties. Now my question to you is did this builder make a huge mistake? I've also seen on the outskirts of oak cliff is another section of spec builds. I can't seem to understand why these guys are building houses in a warzone. If someone local here in the dallas area please explain what the heck is going on?!?!

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Anthony GaydenPro Member
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
12y
Originally posted by @Omar Gutierrez:
So I drove through an area called oak cliff (complete war zone in dallas) and I came across a small neighborhood called encino hills. This area has 100k houses but what surrounds it is a complete run down of houses and commercial properties. Now my question to you is did this builder make a huge mistake? I've also seen on the outskirts of oak cliff is another section of spec builds. I can't seem to understand why these guys are building houses in a warzone. If someone local here in the dallas area please explain what the heck is going on?!?!

It makes perfect sense to me, but I am a forward thinker. I saw redevelopment like that in Kansas City before the real estate market crash.

First you need to remember that lower income people don't necessarily want to live in 100 year old homes. Yes the total household income may only be $35,000/yr, but they can afford a $100,000 house. Many of these people might be ethnic minorities who prefer living in the city, close to things, rather than 20-30 miles away in the suburbs. This market is generally ignored, but that doesn't mean it doesn't exist.

Simply put, a place is no longer a warzone if the vacant lots, abandoned homes, and crappy neighborhoods are rebuilt and redeveloped. I literally saw this take place as a large group of hispanic immigrants moved into Kansas City, KS.

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  • Chris Winterhalter
    Investor · Chicago, IL · Member since 2009 · 566 posts · 274 votes
    12y

    @Omar Gutierrez

    It's more than likely some type of subsidized housing. It's always so interesting to see new homes being built in the toughest of neighborhoods. What's really interesting is if you look at a 5 or a 10 year old house in a rough area the house literally looks like it aged 25 years because of all the abuse it's received.

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  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    12y
    Originally posted by @Omar Gutierrez:
    So I drove through an area called oak cliff (complete war zone in dallas) and I came across a small neighborhood called encino hills. This area has 100k houses but what surrounds it is a complete run down of houses and commercial properties. Now my question to you is did this builder make a huge mistake? I've also seen on the outskirts of oak cliff is another section of spec builds. I can't seem to understand why these guys are building houses in a warzone. If someone local here in the dallas area please explain what the heck is going on?!?!

    It makes perfect sense to me, but I am a forward thinker. I saw redevelopment like that in Kansas City before the real estate market crash.

    First you need to remember that lower income people don't necessarily want to live in 100 year old homes. Yes the total household income may only be $35,000/yr, but they can afford a $100,000 house. Many of these people might be ethnic minorities who prefer living in the city, close to things, rather than 20-30 miles away in the suburbs. This market is generally ignored, but that doesn't mean it doesn't exist.

    Simply put, a place is no longer a warzone if the vacant lots, abandoned homes, and crappy neighborhoods are rebuilt and redeveloped. I literally saw this take place as a large group of hispanic immigrants moved into Kansas City, KS.

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  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    12y

    Omar - don't forget the political aspects of real estate.

    In respect to development (or re-development), we can only imagine how the economics of a new tract built in a tough area may have played out.

    Politician needs to repay a favor to a supporter, who just happens to be a developer.

    Developer sees an opportunity to (maybe) change a negative economic trend in that community.

    Developer builds one less profitable project so that a much more profitable one can be approved in another community.

    Bank offers low, subsidized financing due to local or national programs that exist at the time.

    Just because it doesn't (or didn't) make sense, doesn't mean it was unprofitable. At least to a few.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    One person's trash is another's treasure.

    We all see different values in different things.

    I stay away from what I call " drama investing ". Some people thrive on that type of thing.

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  • Joe Fairless
    Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    @Omar Gutierrez - because Oak Cliff is perfectly positioned to be gentrified. I'm from DFW and have property there. Builders are speculating, and quite accurately in my opinion, that the area will get turned around.

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  • Andrew Herrig
    Rental Property Investor · Dallas, TX · Member since 2012 · 502 posts · 263 votes
    12y

    Oak Cliff, especially the northern half, is rapidly redeveloping. I just purchased a rental there with good cash flow and high quality tenants.

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  • Dan Shoemaker
    Rehabber · Keller, TX · Member since 2013 · 137 posts · 20 votes
    12y

    I agree with Andrew. There is an area just south of Jefferson off of Ravinia that has some very nice homes. Oak Cliff is a very large part of Dallas so to classify it all as a war zone is not really fair or accurate :)

    More to answer the question... Vacant lots in Dallas close to downtown or near major interstates are becoming a premium. I'm not surprised to see a developer go in and build out a subdivision or two if they can find the land to do it.

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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    12y
    Originally posted by @Dan Shoemaker:
    I agree with Andrew. There is an area just south of Jefferson off of Ravinia that has some very nice homes. Oak Cliff is a very large part of Dallas so to classify it all as a war zone is not really fair or accurate :)

    More to answer the question... Vacant lots in Dallas close to downtown or near major interstates are becoming a premium. I'm not surprised to see a developer go in and build out a subdivision or two if they can find the land to do it.

    Agree, Oak Cliff is quite varied, from Kessler Park and Bishop Arts all the way down to the old Red Bird area. North of 12th St has definitely been gentrifying.

    There is a lot of new development just west of the Trinity, north of I-30. Used to be a terrible area,

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  • Daren H.
    Real Estate Investor · Desoto, TX · Member since 2013 · 560 posts · 528 votes
    12y

    As someone mentioned above, North Oakcliff is changing rapidly and is becoming more and more a trendy area because economic development has been a focus. You could make the same case for South Oakcliff one day but I think it will be much much more in the future. Think about how warzones and hoods are created. They are usually formed when the educated population leaves the neighborhood to move to more affluent areas and leave behind the less educated and impoverished. What generally comes next is a lack of economic development in the area because of the population that is left behind. This goes on for years and now you have a full blown hood. Think about what is left behind in cities like Detroit, New Orleans, etc.

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  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    12y

    I don't know about that area but in most major cities, especially DC, it's called gentrification. It's happening in most major cities in the US. Come to DC and I will show you 800k brownstones where people get shot, stabbed and cracked up often.

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  • Kimberly Jones
    Real Estate Junkie · New Orleans, LA · Member since 2008 · 274 posts · 165 votes
    12y

    Left behind in New Orleans? At this point there are few areas of New Orleans that aren't selling property in record time for record prices. Gentrification is "the dirty word" I prefer to call it progress. We have come a LONG way since Katrina and we aren't slowing down any time soon. Just roll through town on I-10 and you see new construction going on all around. Yes, we have our war zones, but they are definitely being pushed out. In some areas you can literally see the movement, block by block. Values are steadily increasing and crime is decreasing as people move in and spread out. 

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