If you own a home, you’re probably especially interested in its value. Most likely, you pay attention to news reports about the local real estate market, watch with baited breath as your neighbor’s home sells, and even ask their favorite Realtor (like me) for a Comparative Market Analysis.
We also focus on ways we can increase our home value, like painting, replacing the roof, or even putting in an addition.
But there are just as many things that could potentially decrease the value of our home, too. Many times, these factors don’t even have anything to do with our house, and there’s nothing much we can do to control them.
Today, we’re going to be covering some of these home value anchors, as I call them. According to numerous studies and national home sales data, the presence of these elements will also drag your home value down. They’ve also assigned a percentage to the potential value drop (compared to similar homes in your county that aren’t near those things):
These things can act as anchors, dragging down the value of your home:
Substandard school:
Home buyers pay very close attention to schools in the area they’re considering, and that extends to schools that are underperforming or just plain poorly rated. In fact, if your neighborhood school is rated “bad” by GreatSchools.org (considered 3 out of a possible 10 or less), your median value may be a whole 22.2% less than comparable homes near top-rated schools! As a Realtor, I’m not allowed to give you specific school information, but I can refer you to some helpful resources if you wish.
Hospital:
On the one hand, it’s great to have vital services and amenities easily accessible to where you live. On the other hand, it seems that people really don’t want to live near a hospital. Between the sound of ambulance sirens, police cars, increased traffic, and possibly even medical helicopters coming and going, a 2015 study found that homes in the close vicinity of a hospital earned 3.2% less when selling.
Strip club:
It’s not hard to see why the presence of a “Gentleman’s Club” would bring an unsavory element to any neighborhood, and one study that correlated home sales near 2,000 strip clubs around the country found that they sold for about 14.7% less than similar homes in ore family-friendly confines.
High crime rates (but not all types of crime):
According to a study conducted by Florida State University that was published in Regional Science and Urban Economics, there are two main types of crime; property and violent.
However, they discovered that only violent crime exerted a “meaningful” influence on reducing property values. In fact, a 10% increase in violent crime within a specific area has been proven to lower home values by up to 6%.
One thing that can spell a death sentence (pun intended) for the price of your house is if a particularly gruesome, strange, or highly-publicized crime takes place on or right near your property.
Substantial billboards (and those with the wrong ads):
Of course, billboards are everywhere these days along highways, large intersections, and casting their shadow in commercial areas. We often just “tune them out” and don’t really notice after a while, but that same trick won’t work for your home values.
In fact, studies show that if a billboard (particularly large ones) are within 500 feet of your house, your home value would be $30,826 compared to similar homes without a billboard nearby.
Furthermore, it’s not just the mere presence of a billboard but what’s on it that cause your home to be worth less. Research suggests that billboards advertising strip clubs, politicalcandidates (either party!), laxatives (or other personal items), or public service announcements for drug addiction can further sink the value of homes in that immediate area.
Sinkholes:
Sinkholes are a relatively new phenomenon, with reports of the ground opening up and swallowing up cars, houses, and even whole blocks, in certain parts of the country (especially Florida). If this happens to you, insurance may pay for the damage to your home, but home prices in that area will likely never recover, as they take an average 30% hit virtually overnight – if they are sellable at all, even if they were not affected!
Dumps and power plants:
It may not be right next door, but no one wants to live near a dump. That’s the conclusion of a study that found that even if you live within two miles or less of a dum or landfill, your home could be worth up to 7.3% less than it otherwise would be.
Similarly, power plants raise some safety concerns, sometimes creating “cancer scares,” (Whether justified or not). So, homes within two miles of power plants will usually be worth 5.3% less.
High foreclosure density:
It seems that foreclosures and other distressed properties (like short sales, bank repos, etc.) beget more foreclosures – or, at least lower property values. Even if you pay your mortgage on time every month and have plenty of equity, but those around you are in default, your value could fall by an average of $7,200. In fact, it’s estimated that for every foreclosure in your neighborhood within 1/8thof a mile, your home value drops by 0.09% on average.
Fracking and water issues
Bad water? That probably means your home value will start going down the drain, as research in Flint, Michigan and other high profile cases shows. In fact, confirmed issues with drinking water, or just the presence of fracking or drilling operations that often cause those problems, will drop the area home values by up to 24% within a 1.25-mile radius.
Neighbor nuisance:
Sometimes, it’s neighbors blasting their music every night (and it’s never good music that they play loudly!). In other cases, they’re filling up their yard with junk, or inviting over 100 of their closest friends for a Civil War reenactment on their front lawn every weekend. Having bad neighbors can drop your value by up to 5 or even 10% when it comes time to sell!
Shooting range:
The presence of a shooting range in your neighborhood can exert a negative influence on your home value, as buyers may have safety concerns. However, the average drop in home value is only 3.7% (just a little more than having a hospital in your neighborhood), alluding to the fact that some buyers may actually feel safer with a shooting range in their proximity.
Casino:
For decades, homeowners, community organizations, and developers debated the positive economic benefits of having a casino open in a certain area. However, an intensive 2015 study by the National Association of Realtors found that the presence of a casino had an “unambiguously negative” impact on home and property values in the area. Furthermore, communities within a 10-mile radius of a casino experience higher than normal rates of foreclosures, crime, and other blight.
A Better "Way" to Real Estate 