We’ve talked about bad locations for homes: busy streets, near railroad tracks, freeways, airports, and power transmission lines. Here’s an article that tries to quantify the cost of some of these location fails. If you’re in the market for a house, here’s some things to avoid when you check out who you’ll be sharing an area with.
By Brian O’Connell – 05/17/11 – 8:15 AM EDT, The Street
NEW YORK (MainStreet) — Woody Allen once said, “We’re all our brother’s keepers, but in my case I share that honor with the Prospect Park Zoo.”
Bad neighbors are nothing to laugh about, according to the Appraisal Institute. An unkempt yard, close proximity to a sex offender or having an unfortunate commercial facility nearby (such as a power plant or funeral home), can reduce the value of surrounding homes by as much as 15%.
Having a power plant near your home usually hurts sales value. One study shows home values within two miles of a power plant can decrease between 4% and 7%.
“The impact can vary tremendously depending on a few factors: how ‘bad’ the bad neighbor is, the kind of neighborhood you’re located in and the type of market that exists,” says Carlos Gobel, director of residential services at Integra Realty Resources in Miami.
Here’s TheStreet’s list of 7 Deadly Nabes, Any particular percent impact on home values comes complete with links to studies, and the softer, squishier numbers merely quote some self-appointed “expert.”
- Power plants – 4-7% hit within 2 miles of plant
- Landfills – 6-10% hit, up to 15% if it’s a Superfund Site
- Sex offenders – 9% hit if living within 1/10 mile, plus takes 10% longer to sell
- Delinquent bill payers – No amount given
- Foreclosed homes – 27% hit within 250 feet
- Lackluster landscaping – 5-10% gain from “pristine” landscaping, no value given for neglected lawns or weed-infested jungles
- Closed schools – No value given, but 75% of home buyers consider school quality “very” or “somewhat” important.
Closed schools above refers to local authorities having budget problems, rather than enrollment changes. Some of you older readers will remember the opening, closing and re-opening of neighborhood public schools as the Baby Boom, the Baby Bust, and the Echo Boom wildly changed the number of school-aged children. But if families move away from a neighborhood because they don’t consider it safe, that’s a school closure due to local, not national demographics, and family flight (or at least families with money flight) will hurt home values.
But there’s nothing in the article about jerkface neighbors who party until 3 am, or run a manufacturing business on their driveway, or harass you for parking in front of their house, or have eight more times people and vehicles than bedrooms. I’d think those would affect the selling price as well, although some are easier to hide than others. And come on, meth labs may add value for the producer but they definitely hurt the house values in the hood.
For a blast from the past, here’s a Millbrae Special with three different location fails.
This is an Open Thread. Share your opinions on bad neighbors, location fails, equity burns, open houses you want to see, or anything else on your mind.