Three Factors that Reduce a Home's Value

Smart Money list the three factors that reduce a home's value as follows:

• Foreclosures -- A study co-authored by Geoff Smith, vice president at the Woodstock Institute, a policy group in Chicago, found that each foreclosure within an eighth of a mile of a single-family home results in a 0.9% decline in the home's value.

• Environmental threats -- A home located within a mile from a landfill, for example, will likely see a 10% to 15% reduction in value, says Robert A. Simons, a professor of urban planning and real estate at Cleveland State University and author of a 2006 study on the effects of environmental contamination on real estate values. Property within two miles of a Superfund site (a government-designated hazardous waste site) could suffer up to a 25% reduction in value (compared with a home that had no threat of environmental contamination), says Simons, who also wrote "When Bad Things Happen to Good Property."

• Crime/Sex offenders -- The closer a home is to a registered sex offender's, the greater the impact on its value, according to James Larsen, a professor at Wright State University in Ohio. Larsen's 2003 study of home sale prices in Montgomery County, Ohio, found that, on average, homes within one-tenth of a mile of a serious sex offender's residence saw a 17% drop in value, while houses between one-tenth and two-tenths of a mile sold for 10% less.

My thoughts on these:

1. Not much you can do about this one. Even "good" neighborhoods are seeing foreclosures these days. Maybe even more so than other neighborhoods since many of the problems stem from people over-stretching their payments to live in "nice" areas.

2. Need to check this before you move. Again, not much you can do after the fact.

3. I checked Family Watchdog as they suggested. Scary stuff.

Comments

[laura.s.d.]

I've been wondering about lower income homes, those at less than 100,000.00 I don't know what resources to use to check statistics, but I wonder what percentage of those is being hit by the mortgage crisis. This has been running around in my head because as you stated, people who have been overreaching are generally those who are going into default, and usually lower income homes aren't being purchased by persons overreaching.

[Leo Contreras]

I am thinking of buying a new home but will not be able to do this unless I sell my home. With the market in the shape it is in do you see any light at the end of the tunel. I'm between a rock and a hard place. If I wait until the market is better then homes will go back up along with intrest rates. Do you have any suggestions that my help me with this problem.

[FMF]

Leo --

Are you trading up or down?