It’s no secret that high levels of crime make neighborhoods less desirable, which negatively impacts home values. For example, last year 10 percent of sellers said the primary reason they sold their home was that their neighborhood has become less desirable.
With access to online databases of both criminal and sex offenders in recent years, buyers can easily check addresses or Zip codes on sites like the FBI’s National Sex Offender Registry or RealtyTrac’s Homefacts.com to find out for themselves how many potentially dangerous people reside a Zip code they are considering and where they live.
Now RealtyTrac has created a Registered Criminal Offender Risk Index that matches registered offenders with home values to find out more about how the presence of offenders impacts local values. The index is based on the number of registered criminal offenders (including sex offenders, child predators, kidnappers and violent offenders) as a percentage of total population in 10,358 U.S. zip codes.
Not surprisingly, average home values and home equity were lower — while average foreclosure rates were higher — in Zip codes with a higher offender index than in zip codes with a lower offender index. The index ranges from 0 to 100, with a higher index indicating a higher percentage of offenders
Surprisingly, the report also shows that average home price appreciation has been slightly stronger over the past year and five years in zip codes with a higher offender index than in Zip codes with a lower offender index, but only Zip codes with an offender index in the bottom 20th percentile have seen home prices rebound above levels from 10 years ago.
“This new index provides concrete evidence that registered criminal offenders pose not only a potential safety risk for homeowners and their families but also a potential financial risk for what is likely a homeowner’s biggest asset,” said Daren Blomquist, senior vice president at RealtyTrac. “This is clearly evident in the significantly lower home values and significantly higher foreclosure rates in Zip codes with a higher offender index, but it may not be as evident in the home price appreciation numbers, which are slightly stronger over the past year and five years in zip codes with a higher offender index. However, the 10-year appreciation numbers demonstrate home values in the lowest-risk zip codes for offenders were not hit as hard during the housing downturn and have rebounded more quickly back to their previous highs — even exceeding those previous highs.”
Unfortunately, the index doesn’t tell us whether the presence of offenders is causing values to fall or if offenders live in lower value areas because they can’t afford any better. In other words, do lower values attract offenders or are offenders lowering values?
However, the index might be a way to measure whether access to the new online information about where offenders live is having an impact on local demand. To what extent are buyers and sellers using these to make decisions on whether to buy in a neighborhood or sell and move elsewhere? Is it enough move the needle on home values?