If buyers have a strong desire to live in a fancy neighbourhood, it’s not a coincidence. While walkable amenities are part of the charm, the real draw is a sense of security and safety. Buyers and tenants are willing to pay top dollar for this draw.
Is crime the culprit?
People crave safety and security in neighbourhoods so they can enjoy the area freely without fear. If a crime is present, fear looms and people scatter. Therefore, yes, crime factors into home price adjustments. If a few prices skyrocket, it raises the neighbourhood’s value. The remaining home will raise their price to compete. When home prices spiral downward, it lowers the neighbourhood’s value. The remaining homes lower the price due to the neighbourhood losing its appeal and residents moving out in droves.
Factors decreasing home prices
Any indication of crime tampers with home prices. For unkempt neighbourhoods, crime is a daily occurrence. The low prices, the neighbourhood’s raggedy appearance, and troublemaking residents equal a bad reputation. Crime added on top of the neighbourhood’s status won’t change perception. Likewise, suburbs and high-end neighbourhoods create a safe and secure reputation. When crime threatens neighbourhood safety, it’s a greater cause for concern. While a few incidents don’t decrease the entire neighbourhood, continuous incidents will dampen the neighbourhood’s charm. Expect residents to move out and warn their network to prevent new residents from moving in.
The real estate market measures neighbourhood crime by yearly percentage, not case by case. When crime increases year to year, it affects businesses. New companies won’t build in neighbourhoods with high crimes while existing businesses will leave. The chain reaction hurts the current residents’ access to local amenities like stores, restaurants, theatres, and gas stations. The domino effect continues to the local government. The government won’t spend taxpayer money beautifying bad neighbourhoods or investing in hospital, police station, school, and library construction due to increased crime. Consequently, the neighbourhood looks run-down and unattractive.
Fortunately, not all crime is equal. Certain crime sprees have a larger effect on neighbourhood value. Robbery and aggravated assault as the primary incidents luring residents away. Homicides and burglary, while secondary, are influential enough to affect home prices. Additional non-crime incidents affecting home prices are sex offenders and police force budget cuts.
Factors increasing home prices
Low or reduced crime increases home prices. When a bad neighbourhood becomes or when a good neighbourhood maintains its reputation, home prices remain on the rise. Homes remain on the rise when word of mouth lures potential buyers and tenants to the area. Word of mouth generates buyer demand, and buyer demand drives home prices upward. The word of mouth that drives home prices upward relates to how safe, sound and secure the neighbourhood is or how the neighborhood changed.
A neighbourhood reaches the low or reduced crime rate by adding security features to the home and area. A neighbourhood watch, neighbourhood ordinance, after-school programs, responsive police force, and home security systems will lure crime away. Without a community dedicated to a safe and secure neighbourhood, it won’t remain safe and secure.
In closing, neighbourhood safety greatly influences whether home prices increase or decrease. Unfortunately, crime is everywhere and focusing only on crime isn’t fair to the neighbourhood. True increase and decrease add up to crime plus the economy, buyer demand, inventory, and market value.