Many down-and-out neighborhood housing markets across the country are on the rebound thanks to a confluence of market forces working in their favor. Tight inventory of homes for sale combined with a dearth of new homebuilding is convincing buyers and investors to reconsider buying in what they once might have considered “bad” neighborhoods.

RealtyTrac analyzed housing market and neighborhood quality data in 3,561 U.S. zip codes with a combined population of 124 million to select the 35 best “bad” neighborhoods to buy a home.

“The underperforming school scores and inflated rates of underwater homes in these markets demonstrates they are lagging the housing recovery seen across much of the rest of the nation,” says Daren Blomquist, senior vice president ATTOM Data Solutions. “But it is clearly evident from this data that many individuals and institutions are betting on these hyperlocal housing markets to still bounce back. Home flipping returns are substantially above the national average, indicating strong buyer demand for fixed-up homes; construction loans are increasing, indicating increased development often at a large scale; and the share of millennial population is increasing, indicating that the pool of new renters and homebuyers is growing.”
 
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