Neighbors Who Hurt Your Bottom Line
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.
7 Neighbors That Can Hurt Your Home’s Value
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.
June 4th, 2011 at 10:06 am
Railroads or busy streets should have been one of the top 7.
June 4th, 2011 at 10:22 am
Another one is rental apartments.
June 4th, 2011 at 10:54 am
Oh, yea, only rental apartments are bad–other apartments are just fine.
June 4th, 2011 at 10:55 am
There’s a big difference between whether the issue was present when the home was bought (like with power lines) or if the issue crops up after you paid for the home with the unforeseen problem (i.e. the sex offender group home sets up next to you after you bought your place).
In the first case you aren’t taking a hit to your bottom line because you got the discount on your home when you bought it. In the second case you paid a premium for a home without the problem and will be selling a home for a discount with the problem.
Therefore, some of these issues like power lines or busy roads aren’t really problems but other issues like sex offenders moving in are a problem…and I am assuming that these are documented sex offenders and not just suspected sex offenders…which would be much more scary…unless they were like that Deb Lafave girl.
June 4th, 2011 at 11:13 am
I think Real Estater should do a guest post, even if he gets a record number of thumbs down. lol.
It would be interesting to see what home he picks.
June 4th, 2011 at 11:36 am
What are you talking about? I got plenty of thumbs up.
June 4th, 2011 at 11:43 am
Guest posts are welcome from anybody, even Realtards. I have invited #2 to do a guest post before, and of course he demurred. As they say in Texas, all hat no cattle.
June 4th, 2011 at 11:47 am
#4- Remember when building on Superfund sites was considered, at least by some builders, desirable?
June 4th, 2011 at 11:52 am
#6, instead of dumping on the “amateurs,” put together a good analysis of a property and why it was or wasn’t priced correctly, along with your prediction for sale price range. You’ll collect more thumbs up adding value than you do kicking over other contributions.
But I suspect you’ll make some silly excuses instead of producing something. That would require thought and effort. You are, of course, welcome to prove me wrong. Heh heh.
June 4th, 2011 at 11:55 am
#8?
June 4th, 2011 at 11:55 am
Oh, yea, edit the entry!
June 4th, 2011 at 11:56 am
Is there a point where additional sex offenders don’t add to the depreciation? For instance, one knocks the price down by X amount, well once that one is there, I’d think an additional one wouldn’t knock the value down by a whole additional X, maybe 1/2X. Once you had maybe 5 or 6 within a mile or so, then you may have taken as big a hit as you can take, maybe X + 1/2X + 1/4X +… in a mathematical series.
This is actually fairly realistic if you’re living say, in El Sobrante, or my nabe.
In the case of my nabe, add in abandoned half-finished houses, RE signs swinging in the wind by 1 screw-eye, meth labs, the ghetto bird at night, houses with 2 bedrooms and 16 cars, home invasion/torture robberies, and a constant simmering undercurrent of loose dogs.
In other words, it’s about 10% worse (from what I’ve seen) than Palo Alto.
June 4th, 2011 at 11:57 am
For what it’s worth- madhaus changed the #8 in message #9 to #6, so that’s what’s behind #10 & #11, and this message.
June 4th, 2011 at 11:59 am
Here is another one: San Francisco condo buyer wants out after disclosure.
That gives a whole new meaning to “equity burns”.
June 4th, 2011 at 12:07 pm
#13 is correct, I mistyped 8 for 6 (I’m on the mobile device, errors are pretty easy because I can’t read other comments when responding to them due to the small screen ) and in the time it took me to quietly fix it, there were 3 reports on the error and correction.
So, #13, why don’t you tweet this too and be sure to send screenshots to yfrog.
June 4th, 2011 at 12:52 pm
Uhh, math is hard.
June 4th, 2011 at 1:39 pm
Ahh, this article reminds me of the fun it was to sell my first house in the recession of early ’90s. Not only was a major local employer shutting a large facility, there was a proposal to build a toxic waste incinerator within ten miles of the place. My lovely neighbor was fighting it and had many signs all over the yard in protest. (It’s so pathetic, it’s funny now.) The incinerator plan was scrapped six months after we finally sold.
June 4th, 2011 at 3:08 pm
I’m surprised they consider only teh sechs ophendurs within 1/10 mile, people walk/stalk/lurk over greater distances than that around here. Or ride their bikes….. I got got a really cool po-leece scanner for 2 dollah last year, just hooked it up a few days ago and am having a relatively entertaining time listening in on all the local misdoings. Of the demographic that gets talked about on police frequencies, you’d be surprised how few have actual, like real, driver’s licenses. The state identity card, not just for teenagers and senil-ior citizens! And how do you think these folks get around? They basically walk, or bike, extra points if you’re over 20 and riding a BMX. 1/10th mile is nothing.
June 4th, 2011 at 9:01 pm
I read a few years ago about a web site on which you could describe horrible neighbors and their behavior, and include their street address. When I told my aunt (who lives in Hayward) about it, she realized that she would NEVER be able to sell her house, if any of her neighbors were described on it. Of course, at this point she could never sell her house in Hayward, anyway.
June 4th, 2011 at 9:36 pm
http://en.wikipedia.org/wiki/Rottenneighbor.com
June 4th, 2011 at 11:57 pm
Whew…the rotten guys and sex offenders are all priced out of the neighborhood!
June 5th, 2011 at 6:37 am
Yea, that’s right, sex offenders ‘are all priced out of the neighborhood!’
I think I’ve heard of someone, recently, accused of a sex crime–I’m sure he’s a poor guy.
“He spent a few days in a Lower Manhattan apartment but is now living in a luxurious townhouse rented by his wife — French television journalist Anne Sinclair — in Manhattan’s TriBeCa district. The townhouse has a gym and home cinema and was last posted for sale for almost $14 million.
Strauss-Kahn’s lawyer has said that although his client has a net worth of roughly $2 million, his wife, an heiress, has ‘substantially greater assets.’ So far, Sinclair has not displayed any hesitation about using her personal wealth to help her husband.”
Think of how much he’d be worth had he purchased PA property with that $2M. Poor guy.
June 5th, 2011 at 9:13 am
Would the presence of a sex offender in the neighborhood really cause property values to decrease if that sex offender was Deb Lafave?
June 5th, 2011 at 11:10 am
Sam, are you a 14-year-old boy? Just wondering, because I don’t think an adult with a young son would be excited about living next door to Deb Lafave.