The term “gayborhood premium” might sound like the bonus round of an HGTV foray into game shows. In truth, it’s what homeowners reap when living in LGBTQ-centric areas, according to recent Zillow research.
And gayborhood residents can cash in big — up to 294% more value for their homes compared with those in surrounding metro areas, as shown in the analysis of 36 housing markets, released in May.
Residences in West Palm Springs boast a hefty 233% premium, compared with the average price of homes in the Riverside metro area, the Zillow study found. Palm Springs has the highest percentage of same-sex couples in California, according to an analysis of U.S. census data by the Williams Institute at the UCLA School of Law.
Guerneville and West Hollywood rank second and third, respectively, in numbers of same-sex couples per 1,000 households.
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West Hollywood carries a 32.9% gayborhood premium, with “a typical home … valued at $203,600 more than one in L.A. County,” states Zillow’s analysis. A 2019 city of West Hollywood survey found that 43% of residents identified as being LGBTQ, with 33% identifying as gay males.
Acme Real Estate broker Summer Brighton said gayborhood premiums are glaring on real estate apps.
“You can see from one block to the next — literally across La Brea, there’s a massive price difference, even if the quality and condition of the homes are almost identical,” she said, referring to the West Hollywood boundary.
“A community creates its own buzz, its own little marketing campaign. A store comes in, a bar comes in that hangs a rainbow flag — that starts a community, and then it’s the hot thing,” Brighton said.
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The west side of the Norma Triangle neighborhood in West Hollywood, which Zillow cites as having more than twice the number of same-sex couple households as greater West Hollywood, carries a correspondingly high premium — 76% more value than L.A. County homes overall, about $468,000 more per house.
The premiums aren’t just prizes handed out by fate — prime landing spots on life’s wheel of fortune, thanks to fortuitous spins — but the results of some savvy risk-taking.
The price was right during the 1970s and ‘80s, when then-residents fled urban centers for the suburbs, and LGBT populations moved in. Those trailblazers found cheaper rents and mortgages, greater job availability and cultural vibrancy, and diverse, more accepting populations. For the first time, LGBT people were able to form larger communities.
One of the best-known enclaves, San Francisco’s Castro neighborhood, now carries a 30.6% premium.
“In the ‘70s, The Castro was 8.1% less expensive than the city on average,” wrote Manny Garcia, author of the Zillow study. “By 2000, real estate prices in The Castro were nearly 40% above the average for the San Francisco metro.”
As properties in such neighborhoods improved — many point to a “gay aesthetic” that smartly transformed dilapidated homes — more affluent LGBT buyers arrived and real estate prices skyrocketed. The charmed cycle has worked so well that run-down Detroit once considered creating a gayborhood from scratch.
Cleveland’s Riverside gayborhood carries the study’s top dividend of 293.9%. Other notable premiums: 116.9% for New York’s west south-central gayborhood; 241.9% for the area around Philadelphia’s Lombard-South subway station; and 109.4% for Cincinnati’s Clifton gayborhood.
Zillow used its home value index as well as census demographics — tracking areas with the highest percentages of households headed by same-sex couples — to produce the table of 36 gayborhoods.
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Of those, only five showed decreased home values — downtown San Jose among them. Same-sex couples headed just 1.1% of households there, Zillow noted, and homes were valued at 38.1% less than those citywide.
Higher values come at a cost, though, pushing “many LGBTQ+ people, especially women and people who are transgender and gender nonconforming,” out of the very areas where they’ve found greater acceptance, Garcia wrote. He noted that the groups have lower incomes than gay men who are cisgender, meaning their gender identity matches their sex at birth.
Bisexual buyers and sellers, for example, are most likely to be single females and average lower annual incomes ($62,400) than lesbians and gays ($92,900) or heterosexuals ($91,200), “and that’s a very large difference in buying power,” said Jessica Lautz, vice president of demographics and behavioral insights for the National Assn. of Realtors. The numbers come from the group’s first-ever profile of lesbian, gay and bisexual home buyers and sellers, released in June.