Ed_Braddy / FlickrWith the real estate market as shaky as it is, homeowners are on high alert for anything that could stand in the way of making a sale.
If you’re already living next door to the noisy neighbour from hell or a row of vacant homes, it may be too little, too late.
But for homebuyers desperate to find property problems to come, it’s crucial to cover all of your bases. No one wants to move into a lemon that they’ll never sell.
We’ve rounded up 9 of the biggest threats to home values in the US.
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 he tells owners of damaged homes to knock 30% off their asking price, plus the cost of any repairs.
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% to 7.3%. 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 to 7%.
A nearby property's overgrown yard, peeling paint and clutter can easily knock 5% to 10% 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.
Scars from the crippling house 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 centre 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 per cent.
Those 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 organisation Resources for the Future found 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 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.
The Ohio kidnapping scandal is proof positive that you never really know who your neighbours are ---- or what they're hiding.
The publicly available National Sex Offender Registry is one way to vet your neighbours before moving in, but it's also made it easier for interested buyers to vet homes 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%, according to a 2008 study by the American Economic Review.
School quality is often 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 lower.
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