Wednesday, June 20, 2012

Cities’ Secret Weapon to Boosting Home Values

Home values in an area can get a big boost by reducing the amount of violent crime, according to a new study by the Center for American Progress. Communities that reduce violent crimes by 10 percent could potentially see billions of dollars in home price appreciation for the community or about a 0.8 percent increase in home prices, the study says. Researchers found that reducing murders in a particular ZIP code followed a “predictable and significant increase in housing values in the same ZIP code in the next year.” For example, reducing crime by one homicide in a ZIP code in a year can lead to a home price jump of 1.5 percent for the next year, according to the study. Researchers also found that reducing homicides by 25 percent could lead to an estimated 2.1 percent increase in housing prices over the next year.

 "The basic idea is that crime has a big negative effect on property values, and if you do a cost-benefit analysis, it will be a good investment and the impact on home values is statistically significant and very large," Kevin Hasset, director of Economic Policy studies for the American Enterprise Institute, said during a conference call. What’s more, the study finds that a 10 percent decrease in homicides and increase in home values could also drastically expand a community’s revenues from property taxes. For the study, the researchers analyzed crime data from police reports and home prices in Boston, Chicago, Dallas, Houston, Jacksonville, Milwaukee, Philadelphia, and Seattle. Source: “Violent Crime Reduction Equals Billions in Home Value Gains,” HousingWire (June 19, 2012)

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