Home Values

12 Unconventional Factors That Affect Property Value

When buying a home, you need to factor in the likelihood that it will increase in value because building home equity is one of the most important benefits of homeownership. Over time, you want to see the home’s value grow so you can build up more and more equity.

There are many things that impact a home’s value — square footage, size of the property, and quality of the construction — but numerous unconventional factors also play a role.

1. Number of Renters in the Neighborhood

A clear correlation exists between the number of rentals near the home and the value of a property. For condominiums, lenders want to make sure that only a small percentage of the units are rented because of the belief that too many renters can impact the property value. The same is true for single-family homes. A neighborhood can be considered less desirable if too many of the homes are rentals. Many people believe that renters will not take care of a property as much as a homeowner.

2. Located Near Power Lines

Everybody needs electricity, but visible power lines can have a negative impact on property values. One study found that power lines near a property could lower a home’s value by as much as 30%. Some studies have shown a correlation between health effects and the proximity of power lines, and that has led some people to purchase a home not located near them. Plus, they can be considered an eyesore and not something somebody wants to see when looking out the window.

3. Located Near Train Tracks

Trains can be loud, and that is one of the main reasons they can have a negative impact on property values. A study found that a smaller home located near a train track was valued at between 5-7% less than a similar home not located near the train. Often times, the proximity of the train track factors into the listing price because real estate agents know that selling a property near a train track can be challenging.

4. Corner Lots

A corner lot is where two roads meet, and the property is located on the corner. For some buyers, a corner lot can be undesirable. People can be concerned that too much traffic will pass by the property when it is located on a corner lot. Also, privacy can be a concern. The increased traffic can mean that more people are looking at the house. In addition, corner lots often have strange configurations and are not formed like traditional square property lines.

5. Located Near an Airport

A property located near an airport can have a lower value for a variety of reasons. The most obvious is noise. Aircraft flying overhead produces a major amount of noise and makes the property less desirable. The other is zoning. Property near an airport is often zoned industrial or commercial so a lot of businesses could be located in the area. That could mean more commercial traffic. Finally, there are health concerns. Airports are associated with a higher level of pollution, and that can put people’s health at risk.

6. Murders or Suicides

Buying a new home is an emotional experience, and having a traumatic event like a murder or suicide associated with the home can have negative impacts on the value of the property. It has been estimated that a death in a home can lower the value by between 10-25%. Sellers cannot hide this information. For example, in California, a seller is legally required to inform a buyer about a death on the property during the previous three years.

AIrplane Taking Off

7. Proximity to a Funeral Home or Cemetery

What happens to people after they die can also impact a home’s value. In general, people do not want to live next to a funeral home or cemetery. For example, a study found that a home in Omaha, Neb. saw the value decline by 3.9% when it was located near a funeral home or cemetery. The impact was more significant in Little Rock, Ark., where a home’s value dropped by 8.6% or $11,050.

8. Situated Near a Major Road

Interstates and major highways can be a drain on a property’s values. The noise and pollution can be a major impediment to people falling in love with a home. The location near a major road can also mean reduced safety and a more difficult time walking or riding a bike, often a quality that people look for in a home.

9. Registered Sex Offenders

Most states require convicted sex offenders to be registered in a database. That information is publically available and easily accessible on a website. A savvy homebuyer can determine if a registered sex offender is located near a property, and that can have a significant impact on the value of the property. A study found that having a register sex offender located within 1/10th of a mile of a home can decrease a property’s value by 4%, but a home farther away saw no significant decrease in value.

10. Bad Neighbors

The neighbor with the broken down car in the front yard or the one that blasts the stereo when a person is viewing a home can have an impact on a property’s value. Nobody wants a bad neighbor, and many homebuyers will avoid buying a home if it appears it has bad neighbors. The overall presentation of the neighbors’ property can have a huge impact on a buyer’s decision.

11. Low Scoring School Districts

Parents often locate in areas of town where the good schools are situated, and that means that low performing schools can negatively impact home values. 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.” Tests scores are publically available and many real estate agents will discuss school quality with a potential buyer.

12. Living Near Natural Resource Industry

The natural gas and oil extracting industry in the United States has increased significantly in recent years. As a result, the industry has had an impact on the many communities, especially in rural areas of the country. Drinking water has been known to be impacted by hydraulic fracturing, a process used to extract natural gas, and a study found that Pennsylvania homeowners who used local groundwater for drinking lost up to 24% of their property value if they lived within 1.25 miles of a gas well.

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James Shea is an award-winning journalist and author. He owns Media Lab, a content marketing and search engine optimization company is Richmond, Virginia.

One Reply to 12 Unconventional Factors That Affect Property Value

  1. While some rentals are not well kept, I bet vacation rental in certain areas, or even STRs, can add value. They are often better kept and offer an option to some in the neighborhoods for revenue to help maintain their homes. I’d be interested in a study to confirm or deny this idea

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