There are a lot of murders in the United States - some 14,249 in 2014, according to the FBI - and here is a blunt question: just what impact is there on the value of a property in which a murder occurs? The answer may be fuzzier than you think.
But about this there is no fuzziness: home prices in dangerous neighborhoods take a huge hit, and you can assume any neighborhood with many homicides qualifies as dangerous. A study reported by website Finder.com claims that “homicides wipe $2.3 billion off the U.S. property market every year.”
Finder, drawing on data from the University of Technology Sydney (Australia), added: “Home prices generally fall by around 4.4% for properties located within 0.2 miles of a homicide location in the year following the murder. Not only are people creeped out by the thought that someone has been killed, a murder creates a perception that the area is generally less safe and has a higher crime rate.”
“Homebuyers have easy access to free sites like Spotcrime.com or Trulia.com that provide detailed crime maps," said Ryan Wright at Dohardmoney.com. "There is an intangible cost of fear and loss of trust. If a homebuyer has concerns about walking down a street at night, chances are they will move on to another property in a safer area.”
No surprise there.
But the other, trickier question is: what about the impact on the value of this home where a murder occurred? Does the value immediately plummet? Does it stay down forever? Or are buyers likely to believe that the circumstances that led to that homicide say nothing about what will happen during their time in the house? Hint: in some cases such homes are a bargain hunters dream. In other cases, well, not so much.
“There is no way of predicting whether a murder which is highly publicized will increase or decrease the value of a property," said Jeff Knox, a Dallas realtor. "I have seen people completely avoid some homes in which a murder was committed. On the opposite end of the spectrum, I have seen famous murder cases greatly increase a property's value.”
In some cases, too, a murder is death to the property. So it was in Ohio, where the house at 2207 Seymour Ave. in Cleveland was torn down six days after its owner, notorious rapist and killer Ariel Castro, was sentenced to 1,000 years in prison. Two neighboring houses were also ripped down.
Teardowns in fact are not unusual in such cases, said Will Johnson, a realtor in Hendersonville, Tenn. “Banks, if they've taken possession of the house, sometimes tear down murder homes because they consider them unsellable,” Johnson said. But in many other cases, impacts on prices are minimal.
“Really it depends on the magnitude of the murder, how widely it was covered by the press and in what light," said Jamal Asskoumi, an owner of online real estate agency Castlesmart.com. "One of the houses I encountered had a murder that did not receive much attention and so did not affect the price too much.”
Individual buyers react individually, however, to murder homes. Florida public relations executive Judith Czelusniak related that some years ago she was looking to buy a house in New England. “After the realtor showed the home for the first time, I was quite interested and I looked up the address online," she said. "I’m not sure why I did, but when I entered the address I found out that husband had murdered wife in the kitchen.” She added that she “knew it would feel too creepy to live there” so she crossed that house off her list.
Bottomline: based on comments from many realtors and buyers, a murder probably will reduce a house’s value - but often not by that much and, in many cases, too it’s up to the buyer to discover the sordid past on his own.
That raises the scary question: might you buy a murder home unbeknownst to you? Yes. Although some states have so-called “stigmatized property” disclosure requirements - California is a case in point; many others impose no obligation on a seller to disclose.
Do your own research. Realtors may or may not tell you, ditto the sellers. It’s up to you to determine a home’s history and to decide if you want to spend your future living in its past.
This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.