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Understanding how crime impacts home values

The value of a home is determined by a variety of factors, so understanding what factors have positive and negative effects can ensure real estate professionals and sellers cater to the preferences of today's buyer.
7/5/2016 12:31:04 PM

The value of a home is determined by a variety of factors, so understanding which have positive and negative effects can ensure real estate professionals and sellers cater to the preferences of today's buyer. 

Understanding what impacts property values 

According to the Journalist's Resource, a research arm of the Harvard Kennedy School and the Shorenstein Center on Media, Politics and Public Policy, robbery and aggravated assault crimes per acre were particularly impactful in dictating the trajectory of neighborhood home values. 

"For every 1% increase in violent crimes, the price of homes in the area falls 0.25%"

Because applying for a U.S. home mortgage and investing in a house are such substantial decisions, interested homebuyers want to feel safe and secure in the neighborhoods where they choose to buy property. 

When safety and security are at a premium, the demand for homes in neighborhoods with higher robbery and aggravated assault rates will decrease. This pulls down the price of homes in the area and increases the prices of homes in safer neighborhoods.

Urban Economics of Duke University referenced a study conducted by Stephanie Swift of the University of Troy which analyzed the ways in which nonviolent and violent crimes impacted housing prices in Jacksonville, Florida. Both pulled down the value of homes in regions plighted by these issues. 

Swift concluded nonviolent crime rates may have such a substantial negative effect on property value because they likely take place where real estate is already more expensive. When high-end homes are targeted and robbed, homeowners feel less safe, which makes these neighborhoods less desirable. 

However, violent crimes are generally more influential on property values. For every 1% increase in violent crimes, the price of homes in the area falls 0.25%.

Investing in security matters 

When individuals understand how much crime can impact the prices of homes in their neighborhood, it can influence their involvement in crime prevention in that region. Not only does this increase the value of the home, but it also improves the quality of life for those living in that neighborhood. 

Interested homebuyers will pay much more for safe homes, and they are less inclined to invest in houses located in neighborhoods with higher crime rates. This has the potential to influence whether businesses move to those regions and ultimately adversely affects the overall desirability of the region. Crime has a ripple effect that influences the quality of schools, the walkability and many other neighborhood features homebuyers seek when searching for a property, so it is in everyone's best interest to invest in crime-prevention methods, like after-school programs and a neighborhood watch. Many of these features are especially true for homebuyers looking to raise a family

For those looking to sell their homes for more money, investing in neighborhood safety and crime-prevention programs is especially worthwhile. 

Security and education matter 

Interested buyers are likely looking for a community that is safe and involved in its security and well-being. Investing time and resources to facilitate the development of a safe neighborhood is critical. Neighbors should encourage each other to keep their eyes out for suspicious activity and report anything right away. When criminals know the neighborhood is in tune with its surroundings, they are less likely to strike. 

In addition, a good school district has a positive impact on both the selling prices of homes in the area as well as the crime rates. When students and the community are dedicated to improving education, there is often less crime. 

Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2015 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.