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You’ve likely never heard the term, but it’s a safe bet you’re familiar with what gayborhoods represent if you live in or have ever visited any of the larger metropolitan cities such as San Francisco, Washington, DC or the gayborhood mecca-Philadelphia.
A gayborhood is defined as a neighborhood heavily concentrated by the LGBT community and where gay-friendly businesses, restaurants and nightclubs are commonly found. Gayborhoods are usually located in large metropolitan cities and can be found across the U.S. from San Francisco to Massachusetts. The term was coined in Philadelphia in reference to the city’s heavy gay population in Center City.
Trulia released a thought-provoking report one year ago that may provide some insight as to why a property or two in a gayborhood might be well worth considering. According to Trulia’s Price Monitor report, along with information from Case-Shiller (Standard and Poor’s Case-Shiller home price index) and other home price indices, while prices were on the increase for nearly every large metropolitan area, there were some differences in the numbers for urban areas and suburban areas in the same city. It should be noted that Trulia defined urban as areas having mostly townhomes, condos and apartments while suburban areas were considered those within a metropolitan area having mostly single-family, detached homes. To determine which area (urban or suburban) had the most substantial recovery, Trulia pulled data on median prices per square footage.on all non-foreclosure homes, and examined population growth based on postal zip codes. The report covers twenty of the major metropolitan U.S. cities and represents a year to year comparison through May and June, 2013 respectively.
The Price Monitor report revealed that urban areas had median prices which were 11.3% higher than the previous year while prices in the suburbs had increased 10.2%. Contrastingly, suburban areas increased in population at a higher rate (0.56%) than did urban areas (0.31%). Could the explanation for the difference lie in sheer supply and demand theory? More demand in suburban areas is met with more development (supply) since there is plenty of building space for more homes. More demand for urban living equals an increase in price since there is often little option to build more because of the limited space (low supply). Perhaps, but let’s look a little further.
Gaps in urban price increases were found in 16 of the 20 cities studied. Of those, Miami, Phoenix, and Detroit had increases of five percent or more over suburban areas. Higher suburban price increases were found in only Seattle, Dallas, Minneapolis, and San Francisco.
The report further found that urban areas with high rise buildings housing more than 50 units experienced an even higher overall price increase (11.9%) than both its urban counterparts and suburban neighbors.
So, now that we know urban areas have a tendency towards higher price increases over suburban areas, what about the gay factor?
Well, we’ve saved the best for last. The largest gains were observed in gay and racially diverse neighborhoods. Racially diverse neighborhoods reportedly enjoyed a 14.3% increase in price. Neighborhoods with households where same-sex male couples were more than 1% of the population saw a 13.8% price increase, while neighborhoods with a higher than 1% same-sex female household experienced the highest overall increase of 16.5% compared to the national increase of 10.5% and the urban increase of 11.3%.
Further, another Trulia report noted it is a common pattern for gay men to live in more expensive areas. The typical same-sex male couple tend to live in a zip code with a median price per square foot of $208; same-sex female couples tend to live in zip codes that are $139/ square foot; while general households have a median of $127/square foot.
These reports provide a pretty compelling argument for investors to take a closer look into the so-called gayborhoods. If these numbers are accurate, historical and sustainable, investors would be remiss in not adding properties from these neighborhoods to their portfolios.
Some of the more well-known gayborhoods can be found in:
- Detroit, MI (Pleasant Ridge)
- Dallas, TX (Oaklawn)
- Philadelphia, PA (Center City/Gayborhood/Midtown Village)
- San Francisco, CA (Castro)
- Manhattan, NY (Greenwich Village, Chelsea and Hell’s Kitchen)
- Washington, DC (Dupont Circle)
- Chicago, IL (Boystown)
- Baltimore, MD (Mount Vernon)
- Cape Cod, MA (Provincetown)
- Fort Lauderdale, FL (Wilton Manors)
- Rehoboth Beach, DE
- West Hollywood, CA
- Palm Springs, CA
What do you think about Trulia’s report? Would you invest in a gayborhood? Why or why not?
