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The Impact of Crime on Real Estate Values

There are many, many things that determine the value of a property. The year it was built, its exact location, the number of square feet, and even the type of appliances can all add to or subtract from a home’s value. The impact of crime on real estate is also substantial. Here, you can learn about the impact of crime on real estate values in just about any city across the country, including Denver.

impact of crime on real estate values 300x200 The Impact of Crime on Real Estate ValuesThe Secondary Impacts of Crime

When it comes to crime as a while, there are primary and secondary impacts. The primary impact of crime affects the victim of the crime and the loved ones of the perpetrator. For example, if someone robs a house, the people she robbed are primarily impacted. If she has children and she goes to jail for her crime, then her children are also primarily impacted. These individuals experience the direct repercussions of that crime.

Secondary impacts of crime are often harder to pinpoint. They are often economic in nature, and they ripple outward to affect hundreds, thousands, or even millions of people. For example, if a murder is committed in a neighborhood, residents will often move to different neighborhoods, which shifts everything from the dynamic of the community to the local economy – both of which are secondary impacts.

What Studies Say

The impact of crime on real estate values has been extensively studied in some markets, and the results are nothing short of shocking. The Center for American Progress conducted a study in 2012 that looked at the primary and secondary costs of homicide rates in eight US metro areas – Seattle, Milwaukee, Jacksonville, Chicago, Philadelphia, Boston, Dallas, and Houston. At the conclusion of the study, it was found that the total direct cost of homicide in those areas was about $3.7 billion per year, or an average of $320 per capita.

This very same study also focused on the impact of crime on real estate values as it relates to homicide. Using the data they collected as well as simple algorithms, the researchers determined that a 10% drop in homicide rates would increase housing values by 0.83% the following year, simply because the secondary effects of those crimes would be reduced, and fewer people would be afraid to live in their neighborhoods.

Other Types of Crime

The impact of crime on real estate values doesn’t stop with homicide, either. Any type of crime, violent or otherwise, can have a significant impact on the way people feel about their neighborhoods, which can ultimately drive values down. For instance, in neighborhoods with high prevalence of drug use, or in neighborhoods with high concentrations of sex offenders, people tend to feel frightened and move away. People won’t want to move into the vacant homes left behind, which causes their values to drop significantly.

The impact of crime on real estate values is substantial, but it’s also a secondary and indirect impact. Crime can affect local economies tremendously for this very reason, and it’s the bigger cities across the country – including Denver – that have the most to lose.

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