By Mamta Badkar
With the real estate market as shaky as it is, homeowners can't afford to deal with more problems. And yet there's always something that pops up –– whether its noisy neighbors or an unfortunately placed sinkhole. We've rounded up some of the biggest threats to the value of a home.
Sinkhole damage sucks property values down a staggering 30%.
The prevalence of reports of sinkhole damage in the U.S. this year has raised questions about the impact on property values. It's not the threat of a sinkhole that damages property value –– there's insurance coverage specifically for sinkhole damage. In fact, a 2007 study found no statistically significant difference in home values in areas prone to sinkholes. Like earthquakes, it's only after sinkholes hit your property that problems arise.
Rob Arnold, a Florida real estate investor and realtor who has bought and sold more than 30 sinkhole properties in the last five years, told CF13 News that he advises owners of damaged homes to knock 30 percent off their asking price, plus the cost of any repairs.
City dumps and power plants can drag down your home value by about 7 percent.
Pick a home in close proximity to a dump or a power plant and watch your property value get dinged. When researchers looked at five municipal landfills on residential property in Cleveland, Ohio, they found the stench was enough to drag down property values by 5.5 percent to 7.3 percent. Landfills are most hurtful in populated, expensive residential areas. The effect was basically nonexistent in sparse, rural areas.
Likewise, the University of California at Berkeley found homes within two miles of a power plant saw values drop 4 percent to 7 percent.
Hoarders knock property values down 5 percent to 10 percent.
A nearby property's overgrown yard, peeling paint, and clutter can easily knock 5 percent to 10 percent off the sale price of your home, said Joe Magdziarz, the president of the Appraisal Institute and a real-estate appraiser with 40 years of experience. A true disaster -- a junky home in deplorable condition and a yard packed with debris -- could cost you even more.
Foreclosure graveyards chop $7,200 off their neighbors' property values.
Scars from the crippling housing crisis still remain in the form of quasi-foreclosure graveyards across the country. Across America, foreclosures were found to cause an average $7,200 price decline for every nearby home, according to the Center for Responsible Lending.
And a study by Chicago-based Woodstock Institute found each foreclosure within 1/8 mile of a single-family home drops that home's value by at least 0.9 percent.
Noisy neighbors (or their pets) are enough to drag home values down by 5 percent to 10 percent.
There's a reason prospective homebuyers are advised to make multiple visits to homes and at all times of day: Noise can be a property-value killer.
“I’ve seen many situations where external factors, such as living near a bad neighbor, can lower home values by more than 5 to 10 percent,” Appraisal Institute President Richard L. Borges says. "Homeowners should be aware of what is going on in their neighborhood and how others’ bad behaviors could affect their home’s value.”
Just the threat of fracking drives home values down by 24 percent.
Homeowners in Mayflower, Ark., were terrified their property values would tank after a burst gas pipeline flooded their lawns with oil earlier this year.
Their fears are justified. A team of Duke University economists and nonprofit research organization Resources for the Future found that Pennsylvania homeowners who used local groundwater for drinking lost up to 24 percent of their property value if they lived within 1.25 miles of a shale gas well. And that's even without solid evidence that fracking really poses a threat to drinking water –– public perception alone is enough to drive down home values.
Registered sex offenders deliver a 12 percent wallop to home values.
The Ohio kidnapping scandal is proof positive that you never really know who your neighbors are –– or what they're hiding.
The publicly available National Sex Offender Registry is one way to vet your neighbors, but it's also made it easier for interested buyers to vet homes before moving in as well. Sex offenders have been proven to drive down property values.
Houses located next door to a registered sex offender dropped by up to 12 percent, according to a 2008 study by the American Economic Review.
Tacky billboards knocked $30,000 off home values in Philadelphia.
Tacky billboards are an eyesore and can potentially downgrade home values, a recent study found. In “Beyond Aesthetics: How Billboards Affect Economic Prosperity,” urban planner Jonathan Snyder found that homes within 500 feet of a billboard were worth $30,826 less on average at the time of sale than others farther away.
On the flip side, areas where communities implemented strict billboard controls had higher median incomes, lower poverty rates and lower home vacancy rates.
Bad schools send parents running and hurt property values in the process.
School quality is often a top priority for homebuyers, and that means neighborhoods almost always benefit from being in close proximity to the cream of the crop. A 2010 study by the St. Louis Federal Reserve Bank found that "the price premium from school quality remains substantially large, particularly for neighborhoods associated with high-quality schools."
Unfortunately, the flip side of this scenario is that neighborhoods near closed-down or low-ranking schools are less attractive and tend to see their property values lowered.
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