Secure in Your New Home? Research Crime Rates and the Impact on Home Value

by Matty ByloosMay 13, 2016

Do High Crime Rates Lower House Values?

Ask any home buyer what they think is most important in a home and/or neighborhood, and more times than not, you’re going to hear “low crime rate.” In fact, according to a study conducted by John Burns Real Estate Consulting, safety is more important to home buyers than just about every other factor, including price!

But, just exactly how much does a community’s crime rate affect housing prices? The answer might surprise you.
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Low Crime Rate = Higher Property Value

This is practically a given. Areas that have low crime rates enjoy higher property values simply because buyers are more willing to spend for the security that’s “promised.” When crime rates start climbing, the housing prices start falling because homeowners don’t want the added risk.

How Much Does Crime Impact Real Estate Prices?

While crime certainly plays a role in the health of a city’s housing market, the actual effect can be difficult to determine. The reason is because home prices are affected by a very diverse range of factors. For instance, home prices fluctuate with the national and local real estate market, buyer demand, changes in national and local economies, and more.

And when it comes to crime, not all crime affects housing prices the same. According to a 2010 study conducted by researchers at Florida State University and published in Regional Science and Urban Economics, of the seven categories of crime studied, “only robbery and aggravated assault crimes (per acre) exert a meaningful influence upon neighborhood housing values.”

In yet another report published by the Center for American Progress, it was determined that crime’s impact on property values was also substantial. The study concluded that “a 10% reduction in homicides would lead to a 0.83% increase in housing values the following year.”

Can an Increase in Crime Boost Your Home’s Value?

As hard as it might be to believe, in certain instances, local crime can actually have a positive impact on real estate prices. This happened in Ontario, CA in 2008 when a neighboring city, San Bernardino, slashed its police force by 13 percent. After the cut, San Bernardino’s crime rate rose by an incredible 25 percent.
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Interestingly, before the cut, homes in San Bernardino were valued about 15 percent higher than those in Ontario. But after the cut (and the resulting crime rate increase), the home values in both cities changed to the point that now Ontario’s homes are worth about 13 percent higher than its neighboring city, which is located just 15 minutes away.

Should Crime Rate Be Considered When Shopping for a New Home?

Even though crime’s true effect on housing values is often up for debate, a neighborhood’s crime rate is definitely something to keep in mind when you’re shopping for a home.

Be sure to find out a few things about a neighborhood while you’re on the hunt for a home there. Is the city planning on cutting its police force? Has the area had a measurable increase in crime over the last decade? What type of crime is most common in the area? What is the crime rate like in the next city over?

When you’re shopping for your new home, always research the crime rate in the neighborhood and the city it’s located in before making a purchasing decision. You don’t want to be surprised after you move in!

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About The Author
Matty Byloos
Matty is the Content Marketing Specialist for Homes.com. He's a newly minted homeowner who currently lives in Portland, Oregon with his wife. When he's not working, he enjoys writing fiction, working on the house, and enjoying the amazing nature that the city has to offer. He is also the founder of NOVEL Creative Agency.
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