University of Denver real estate professor Jeff Englestad, left, visits with resident Harold Mead in the Platt Park neighborhood, where new developmentis
University of Denver real estate professor Jeff Englestad, left, visits with resident Harold Mead in the Platt Park neighborhood, where new development is replacing older homes. His wife is the third generation to live in the 1901 home at rear, which they plan to sell. (Post | Brian Brainerd)

Skyland. Five Points. Montbello. Whittier. They're four Denver neighborhoods in the midst of transition, sliding up or down the scales of buyer interest, property value, resident affluence and overall stability.

"Historically ... people move up the housing scale and houses move down the social scale. That's the suburban mode we've been in for a long time," says University of Denver professor Jeff Englestad.

However, in a neighborhood undergoing a so-called gentrification, just the opposite happens.

"People of greater income move into a neighborhood and displace people of lesser income," he said. "Homes actually move up in social standing."

Neighborhoods that move up can generate big payouts for real estate investors and homeowners motivated to sell. But at the same time there can be clashes between new and old residents that keep changing areas from solidifying.

"What we don't know how to do is maintain the balance so a neighborhood doesn't go from low income to mixed income to (exclusively) high," says Robin Kniech, program director for the Front Range Economic Strategy Center. "Research shows that mixed-income communities are stronger. Private business often disinvests in strictly low-income areas because of real or perceived lack of purchasing power."

In Skyland, a relatively small neighborhood bordered by Martin Luther King Boulevard to the north, East 23rd Avenue to the south, Colorado Boulevard to the east and York Street to the west, an influx of young professionals and upwardly mobile families is creating a windfall for many.

Although the number of home sales is dropping - 17 in the third quarter of this year compared with 19 in the second quarter - property values continue to rise.

Skyland's average sale price of $224,935 in the third quarter of 2007 is 37.8 percent higher than the neighborhood posted for the third quarter of 2002, according to real estate website Those figures are about 5 percent higher than all of Denver for the same time period.

To a lesser extent, the Five Points and Whittier neighborhoods are also moving up in social standing.

"I always thought Five Points was a hot area because it's so close to downtown," says Bill Robinson, a broker with Capital Brokers. "It should have changed a long time ago."

Although Five Points is one of Denver's oldest neighborhoods and sports a number of detached, brick, single- family properties, the "high-end homes there now are mostly new construction," according to Robinson.

A snapshot of homes on the market earlier this month showed properties ranging from $89,900 to $1.6 million. Even though Trulia lists the average sale price in Five Points as $271,879, that's still up more than 5 percent from 2002.

Robinson said the last seven or eight deals he's conducted in the neighborhood were set in motion by aging homeowners, not rising property taxes or other factors.

"The owners were old. Three of them died," he said. "Their kids didn't want the homes, and they cashed out."

In nearby Whittier, City Councilwoman Carla Madison says she worries about the impact gangs, crime, subsidized-housing policies and apathy can have on efforts to improve the neighborhood, which is slowly becoming gentrified.

"A lot of Whittier is great, but there are some really hard blocks right now," Madison said. "We're trying to crack down, but a lot is just very troublesome."

Simmering problems have caused some urban pioneers to pack up and move out.

"I hear from people who bought homes, put a lot of money and love into them, and their block hasn't changed," she said.

While Skyland, Whittier and Five Points are moving up in social standing, the outlook for Montbello homeowners isn't as bright.

"A lot of people are moving out because they want newer homes. Those moving in are pretty much first-time home buyers, people who were renting before," Robinson explained. "In some cases, homes that originally sold for around $210,000 are now $160,000 to $170,000."

Home prices in Montbello declined 17.4 percent between the third quarters of 2002 and 2007, from $178,028 to $146,964. 

Even though Montbello has one of the highest foreclosure rates in the city - there were 123 in September - people who lose their homes still need a place to live, and many prefer to stay in their current area.

Buying property in the area could pay off in the long term because "there's a difference between what makes a smart real estate investment and what makes the kind of community where most people want to live," Kniech said.

Timing when to move into or out of a neighborhood can be as difficult as trying to time when to buy or sell stocks. Do it right, and you hit the equivalent of a real estate lottery jackpot. Miscalculate, and you're stuck with an investment that's hard to give away.

"A smart investor would buy a three- or four-bedroom, bank-owned property that's less than 10 years old and priced about 25 percent below the building cost," Robinson added. "If it's a place they can hold on to or rent out for a couple of years, they'll come out really well."