Everybody seems to know that location is king in real estate, and no one wants to buy homes in a neighborhood where home value keeps going south. But in reality, many people often have no choice but do a trade-off between price and location. For example, one might think buying a lower-priced home in a not-too-bad school district wouldn't hurt too much. But in fact, Realtor.com staffer Yuqing Pan knows from her data crunch that a bad school can drag down the home value in the entire neighborhood by--as much as--22.2%.
Pan looks at home prices and appreciation rates across the country where a specific "bummer" feature drags down the neighborhood's home price. She calculates the price discount for each feature by comparing the median home price in the zip code area with the median home price for all homes with that same feature across the country. Pan's research is limited to the 100 largest metropolitan areas, as rural communities usually have lower home prices and slower appreciation.
Here are the nine features that drag down the neighborhood's home value, and how much they could lower the price:
- Bad School: -22.2%
- Strip club: -14.7%
- High concentration of renters: -13.8%
- Homeless shelter: -12.7%
- Cemetery: -12.3%
- Funeral home: -6.5%
- Power plant: -5.3%
- Shooting range: -3.7%
- Hospital: -3.2%