If ever there were a third rail of residential real estate, it would have to be the topic of crime. The radioactive issue and its relationship to residential real estate has been a troubling topic for agents for decades. But how is it impacting the bottom line now?

It’s an issue that is so sensitive the federal Fair Housing Act establishes parameters for how brokers can discuss it with their clients. And while prospective home buyers have always asked questions about the safety of the area they’re considering moving to, the topic has become even more prevalent since the onset of the coronavirus pandemic that helped spawn a nationwide surge in crime.

Whether or not rising crime rates are impacting sales on a large scale is difficult to ascertain — some markets, such as luxury condos along the Magnificent Mile in Chicago, for example, have taken an undeniable hit — but brokers in markets across the country give mixed responses when asked whether it’s hurting their bottom line. The economic impact of crime on real estate is even more difficult to pinpoint in the current market, when many residential brokers are enjoying the best years of their careers.

Broaching a delicate subject

The aforementioned Fair Housing Act guidelines aim to prevent “steering,” a term used to describe agents who encourage buyers toward — or more importantly, away from — communities based on race, religion and a number of other protected classes.

But the issue is just as relevant now as it was when the federal law was passed in 1968. Case in point: The online brokerage Redfin, along with Realtor.com, announced in December the decision to remove neighborhood crime data from their websites. Trulia, a subsidiary of online broker Zillow, also pulled its crime data about a week later.

Redfin Chief Growth Officer Christian Taubman wrote in a Dec. 13 press release that the data available fails to paint an accurate picture for consumers and could result in discrimination, and that “given the long history of redlining and racist housing covenants in the United States there’s too great a risk of this inaccuracy reinforcing racial bias.” The change comes at a time when some municipalities have reduced funding to police departments in response to widespread protests opposing police brutality. Despite efforts to curb housing discrimination, neither the federal law nor the dwindling sources of information available online have reduced questions from home buyers.

Less than two months prior to announcing the decision, Redfin released a survey showing that crime is the No. 1 issue for home buyers. Half of survey respondents who moved between the beginning of the pandemic and mid-August 2021 said crime factored into their decision.

John Ford, broker/owner of Ford Realty in Boston, said he often receives questions about crime but, citing the Fair Housing Act rule, is careful not to characterize the level of safety, or lack thereof, in the neighborhoods where he works. Instead, he advises clients to search the internet for local crime stats on their own.

“I always advise Boston condo buyers to do their due diligence if they’re concerned about crime activity,” he wrote in a blog post on his company website. “Car theft/break-ins, muggings, assaults and burglaries are unfortunately incidents that happen in all Boston neighborhoods.”

He said in a telephone interview that while many considering buying in Boston aren’t deterred by the crime rate, he does see the effect local crime news coverage has on some home buyers, particularly empty nesters considering downsizing or buying a second home in the city.

“I think if they’re hearing negative news on crime, it does have an impact on the real estate values,” he said. “Empty nesters don’t want to move into a crime-ridden area.”

A city with a reputation

The topic of crime might be a little easier for brokers like Ford, who operates in a large municipality that regularly bucks national trends on crime. In the first half of 2021, homicide was down nearly 30% in Boston, and Part 1 crime, which, along with homicide, includes rape, robbery, burglary and other serious crimes, had dropped 17%, according to a report in The Boston Globe.

It’s a different story in cities like Chicago, where serious crimes have spiked in recent years. Matt Laricy, managing broker of The Matt Laricy Group, a division of Americorp Real Estate, works largely in the upscale River North area of downtown Chicago. He says the jump in crime has driven clients away from the area. “I hear all day long, ‘We’re moving because of crime,’” he said.

The luxury condos he specializes in took a big hit at the beginning of the pandemic, but Laricy said buyers are starting to return. It’s not just the rise in crimes like carjacking and homicide that have fueled buyer concerns, but also the public demonstrations that resulted in looting and millions of dollars in property damage in 2020, according to Laricy.

“If you push things too far, it can go to a certain point where it can’t be saved,” he said in August 2020 when the city was reeling from the destruction they were seeing in their communities. “If you have something happen like that again, I don’t think Chicago can come back.”

Laricy contends now that the industry should press elected officials to increase police presence throughout the city. “It’s a simple thing to fix, but it’s not popular to say that right now,” he said.

Marla Forbes, an @properties agent who works primarily in the affluent Gold Coast neighborhood of Chicago, said it’s not just crime, but also high taxes that are driving people away from Chicago, particularly those nearing retirement. “I think if they’d considered having a part-time place in Florida, Texas or Arizona, they decided on making that their full-time home and maintaining a second home in Chicago,” she said.

Crime might have sped up or influenced that decision, she added. Unlike Laricy, though, Forbes said she doesn’t often hear a lot about crime from clients. “People who want to live in the city are still looking in the city,” she said.

Forbes added that the flight to the suburbs of Chicago after the pandemic was driven in part by an oversupply of homes. “The city was and still is such a vibrant, interesting and exciting place to live, many were forgoing a move to suburbs and staying put and buying townhomes in the city, so there was an oversupply in many of the suburbs” she said. “Properties were just sitting in Highland Park and Lake Forest, in particular.”

Should I stay or should I go?

Crime rates have also spiked in Atlanta, prompting the city most recently to form a new police precinct in the high-end Buckhead community. It comes at a time when many in the affluent neighborhood are pushing to separate from the city of Atlanta and establish their own municipal government.

The newly elected mayor, Andre Dickens, announced the opening of the new precinct on Jan. 13, stating, “The most important issue for any mayor is to keep our cities safe and its residents safe. It is a paramount concern to me to stop this crime wave that we have in our city,” according to an article in the Atlanta Journal-Constitution.

Anthony Acosta, an associate broker with Harry Norman, REALTORS®, who specializes in luxury condos in and around Atlanta, attributes the rise in crime there to the pandemic-driven economic downturn.

“I grew up in New York, and I’ve lived in other big cities in other countries, and normally, in big cities, when you have issues with the economy, you tend to see crime rates go up,” he explained. “It’s just a factor of living in a big city.”

He said that home buyers should consider the larger perspective. “It’s a nationwide thing. People see in the news shootings and crime in Buckhead, and they take it as, ‘This is my neighborhood,’” he said. “But it’s not just in Buckhead — it’s everywhere.”

Acosta’s business has not slowed down as a result of increased crime in the area, but he said he has seen it hurt others in the industry. Questions about crime are more common these days than even a few years ago, he said.

But like Ford in Boston, Acosta said he won’t discuss the topic with home buyers. “I try to stay neutral, because I have to be careful what I say. I tell people that it’s part of living in a big city and direct them to go online to do their own research,” he said.

To the suburbs … and beyond

Matt Silver, a partner and broker with Corcoran Urban Real Estate in Chicago, said that crime has driven some buyers away from the city, but only about one out of every 10 of his clients voice a concern. It’s not just crime, though, according to Silver. He said the migration to the suburbs was fueled in part by low interest rates and the ability to work from home. Some clients moved a few years earlier than they’d planned, Silver said.

Forbes also said she saw an initial flight to safety at the beginning of the pandemic, but that the market has since stabilized. “I think that when the pandemic hit and the civil unrest hit, a lot of people panicked, and it drove sales in the suburbs and southwest Michigan was on fire,” she said.

But buyers weren’t just leaving for greener pastures a short drive away from the city. That exodus has involved many leaving the state entirely, according to Kim Offord, managing broker and district director of Fathom Realty.

Offord, who works in Chicago’s Chatham neighborhood on the South Side, said people are leaving in part because of the work-from-home trend and states like Texas giving homebuyers better deals. While violence nationwide is driven in part by a struggling economy, she believes that in Chicago it’s also because of a lack of investment in economically depressed communities.

Large retailers like Target and Walgreens closed up shop on parts of the South Side prior to the pandemic and public demonstrations condemning police brutality, but no businesses are coming in to take their place, she said.

“People are tired of not having anything in their communities; we shouldn’t have food deserts or have to go two miles just to go to a drug store,” she said. “We’re seeing the wrong kinds of businesses open up like liquor stores and pawn shops. That damages the walk score and brings down property values.”

A downward spiral?

The departure of residents due to crime can have a snowball effect when a reduction in property tax revenue makes it even more difficult for officials to protect a municipality, Redfin Chief Economist Daryl Fairweather said in late October in the survey that showed crime was the most important factor to homebuyers.

“Cities historically have been able to attract residents looking for high paying jobs, but now that remote work is ubiquitous, some may have to work on improving safety and other quality of life factors to retain and attract residents,” Fairweather wrote. “This might be an uphill battle, because as wealthy residents leave, they take tax dollars with them, leaving cities with less resources to address safety concerns for remaining residents.”

Laricy said he’s also concerned that crime and demonstrations that result in looting will hurt the city’s sales tax revenue, noting the large portion of the sales tax base the Mag Mile contributes to the city.

There’s a lot to consider when it comes time to sell your house. Plenty of factors, both in and outside your control, can affect your property’s value and impact how much you get for your home. One of the most relevant of these factors is your area’s crime rate.

Generally speaking, the more crime happens in or around your neighborhood, the less your property will be worth. A 2019 study found that housing prices drop by 1.5% for every 1% increase in crime.

Crime’s effect on property value is unavoidable, but why does this happen, and how can you address it? Here’s a closer look.

1. Buyer Safety Concerns

The most straightforward way crime rates impact property value is by raising concerns among potential buyers. U.K.-based insurance firm Churchill found that 69% of potential home buyers worry about crime in the area they’re looking to buy in. If these people see your neighborhood has a high crime rate, they may look elsewhere.

Given these concerns, high crime drives down demand, which causes prices to fall in response. You should note, though, that not all crimes have an equal impact on demand. Violent crimes like assault and burglary are more likely to scare away potential buyers than things like cyber crime.

2. Insurance Rates

A less obvious way that crime affects property value is through insurance rates. Increased crime rates lead to higher insurance rates. Even if buyers are undeterred by local crime statistics, having to pay more for insurance could turn them away, reducing demand.

Crime raises insurance rates because of the higher likelihood of someone making a claim. Interestingly, this typically only happens with neighborhood crime rates, not a specific property’s history. If a burglary or even murder occurred in your home, it wouldn’t impact insurance rates.

3. Ongoing Crime Cycles

Just as crime lowers property prices, property prices can influence crime. That’s because low prices will attract lower-income individuals, and crime often comes from poverty. Poverty leads to desperation and hopelessness, which in turn drives people to commit crimes. As more people do, the neighborhood’s value will decrease further, starting the process over again.

It’s a tragic cycle and one that compounds the effects of crime rates on property value. Homes in high-crime areas can face continually falling prices because of these patterns.

Accounting for a High Crime Rate

If your home is in a high-crime area, you can take some steps to make the most of it. Some home improvements can help bolster your house’s value and assure uneasy potential buyers. For example, garages are one of the most targeted break-in points, meaning a secure garage door can comfort buyers.

Other security improvements have the same effect. Installing cameras, building fences, and putting in tougher locks can all help calm any fears that buyers have about crime. These may not increase your property’s value, but they will raise your chances of finding a buyer.

You could also try to form a neighborhood watch group. Such efforts have in the past reduced some crimes by 35%, so they can be surprisingly effective. In addition to helping lower crime rates, the presence of a neighborhood watch may comfort potential buyers.

Understand Your Property’s Value

When you understand how crime rates affect property value, you get a better picture of what you can ask for your house. The fairer your asking price, the more likely you’ll be to make a sale. If you’re looking to sell your home, pay attention to your neighborhood crime rates and make any necessary adjustments you can.

Deciding to move and buying a house can be a stressful yet exciting process. One of the biggest decisions you’ll make when beginning your home search is where you will live. After you decide on the location of your new home, it’s time to pick your new neighborhood. Picking your new neighborhood can be tough, especially if you have a family. It’s important choose the safest and most practical neighborhood with something for everyone! 

Neighborhood Safety  

The first and most important thing to consider when choosing your next neighborhood is the overall safety of the area. At Metro One Properties we know the importance of safety, so there are many ways to determine this.

First, go to https://www.areavibes.com/ , see what they have to say about the neighborhood you are looking at.

Other things can help you evaluate a neighborhood safety:

• View Sex Offender Registries.
• Use Crime Mapping Services to Check Neighborhood Crime Rates.
• Look At Market Performance.
• Check Things Out for Yourself.
• Evaluate the Community.
• Determine Your Neighborhood Standards.
• Hear What the Neighbors Have to Say.

How Walkable Is the Neighborhood? 

Go to https://www.walkscore.com/. Walk Score, a subsidiary of Redfin, provides walkability analysis and apartment search tools. Its flagship product is a large-scale, public access walkability index that assigns a numerical walkability score to any address in the United States, United Kingdom, Canada, and Australia.

Walk Score bases its scores on the walking distance from any given address to amenities such as stores, restaurants and parks, the number of nearby amenities and the ease of walking to them — with short blocks and regular intersections considered more pedestrian friendly.

According to Walkscore.com, a score from 0-20 and 25-49 means Car-Dependent, 50-69 means Somewhat Walkable, 70-89 means Very Walkable, and 90-100 means Walker’s Paradise. Even though a Walk Score below 59 seems low, if the score is between 25-49, your family may still be able to walk around the neighborhood, but you won’t be able to run errands on foot. If you want an area that’s more friendly to walkers, try to find a home in an area that has a walk score above 50. 

How Loud Is It? 

To learn about how loud your neighborhood will be, check the Sound Score. Below the Walk Score, you will see the Sound Score. The Sound Score tells you about the outside noise level at the address. The scale for the Sound Score is from 0 to 100. Zero is very loud, and 100 is very quiet. Getting a good night’s rest, no matter who you are, is important, so if you are concerned about the sound near your home, it’s best to choose a home with a sound score between 70 and 100.  

Is There Transit Nearby? 

To check on nearby transit for you and your family, check the Transit Score. You should see the Transit Score to the right of the Walk and Sound Score on the listing details page. The Transit Score tells you how close the address is to nearby public transit, and the scale is from 0 to 100. According to Walkscore.com, a score from 0-24 means Minimal Transit, 25-49 means Some Transit, 50-69 means Good Transit, 70-89 means Excellent Transit, and 90-100 means Rider’s Paradise. Using public transit is not only an environmentally conscious decision, but it’s a more affordable option than using a car every day. If you want to ensure that your new neighborhood has as many public transportation options as possible, pick a home that has a Transit Score above 50.  

Is It Safe to Ride a Bike? 

To learn about how safe, it is to ride bikes in the neighborhood check out the Bike Score. The last part of the “Scores” section is the Bike Score section, located below Transit Score. According to Walkscore.com, the scale is 0 to 100. A score of 0-49 means Somewhat Bikeable, 50-69 means Bikeable, 70-89 means Very Bikeable, and 90-100 means Biker’s Paradise. If you and your family enjoy riding your bikes together, you should look for a home with a bike score of at least 50 and above to ensure all of your rides are as safe as possible.  

 Streetlights  

Next, look around and see how many streetlights will be near your new home. At night, a few streetlights will help you and your family feel safer. If you see streetlights on your street but they don’t come on at night, you might be required to pay a small monthly fee to your power company to keep the lights on. This sometimes occurs in areas outside the city limits.

Crime Rates  

Go to CityProtect at www.cityprotect.com .

CityProtect, part of the CommandCentral Community solution, is the public site bringing together community-focused functionality for better communication and partnership with law enforcement. This page is for public safety agencies wishing to join our community, and for agencies

You should check out the crime in the area, you can check out the nearest law enforcement agencies and see the incidents happening near the neighborhood. You can also sign up for incident updates to always be in the know and protect your family.  

Commute to Work  

Another big consideration you need to make before choosing your next neighborhood is your daily commute to work. You may find a neighborhood you love, but the commute may be over an hour to and from, and that commute could be even longer depending on traffic. Therefore, you should put the home and work addresses into Google Maps to see how long the commute will be. If the commute seems too far, you should pick a neighborhood closer to work.  

Schools  

If you have kids, you’ll likely want to check out the schools in the neighborhood you are considering. You can go to homes.com and get information about the schools in the area you are buying in Typically, each listing has four schools listed. With each school, you will learn its score out of 10, whether it’s elementary, middle, or high school, if the school is public, private, or charter, and how long of a car ride or walk it is from that address. Homes.com gets their school’s scores from greatschools.org. This  is a website where you can search by the address or name of the school and check out the overall ranking of schools and their test scores. By learning the most about the schools in the area you can be sure that you are sending your children to the best schools available. 

Amenities Nearby  

You might also want to consider the amenities you would like your neighborhood to have, whether it’s a park, pool, gym, or restaurant.  Determine what kind of amenities would be best for you and your family to enjoy. To find out more about your new neighborhood’s amenities, scroll down to the “Parks and Recreation” section or the “Property Details” section on the listing details page. Having these amenities is fun for the whole family and a great resource when making new friends in your neighborhood.  

Engagement 

Speaking of making new friends, you may want to consider the engagement of your neighborhood. Some neighborhoods host group events such as block parties around the holidays. If you and your family enjoy these types of activities, then try and find a neighborhood with a community that engages with one another. Most neighbors that have a lot of engagement usually have an HOA. An HOA is a Homeowners Association that charges monthly fees to residents to maintain the neighborhood and keep engagement high.

In a recent survey of home sellers by Qualtrics, 87% of respondents said they were concerned their home won’t sell because of the pandemic and resulting economic recession. Of the respondents, 51% said they are “seriously worried.” That concern seems reasonable considering the current condition of the economy. The data, however, is showing that home purchasers are still very active despite the disruptions American families have experienced this year.

The latest Existing Home Sales Report published by the National Association of Realtors (NAR) revealed that 340,000 single-family homes sold in this country last month. NAR’s most recent Pending Sales Report (homes going into contract) surpassed last month’s number by over 44%, which far exceeded analysts’ projections of 15%. ShowingTime reported that appointments to see homes (both virtually and in-person) have increased in every region of the country and are up 21.4% nationwide over the same time last year.

While buyer activity is surging, the number of listings has fallen to an all-time low. Zelman Associates, in their latest residential real estate report, revealed that housing inventory as a percentage of households has fallen to 1.2%, which is half of the long-term average and lower than any other time in our history.

Bidding Wars Heating Up Again

With buyer demand growing and the supply of available homes shrinking, purchasers are again finding themselves needing to outbid other buyers. NAR, in a recent blog post, revealed:

    “On average, there were about three offers on a home that closed in May, up from just about two in April 2020 and in May 2019 (2.3 offers).”

Bidding wars guarantee houses sell quickly at a price near or even slightly over the listing price.

Bottom Line

If you’re thinking of selling, don’t be concerned about putting your house on the market right now. There’s no better time to sell an item than when demand for it is high and supply is low. It is exactly at that time when you will negotiate your best possible deal.

Taking Advantage of Homebuying Affordability in Today’s Market

 Everyone is ready to buy a home at different times in their lives, and despite the health crisis, today is no exception. Understanding how affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down their optimal window of time to make a purchase.

There are three main factors that go into determining how affordable homes are for buyers:

• Mortgage Rates
• Mortgage Payments as a Percentage of Income
• Home Prices

The National Association of Realtors (NAR), produces a Housing Affordability Index, which takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:

    “…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

Their methodology states:

    “To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”

So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:

Taking Advantage of Homebuying Affordability in Today’s Market | Keeping

Current Matters

The green bar represents today’s affordability. We can see that homes are more affordable now than they have been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

Why are homes so affordable today?

Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it is more affordable to buy a home today than at any time in the last seven years.

If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

If you feel ready to buy, purchasing a home this season may save you significantly over time based on historic affordability trends. Reach out to a local real estate professional today to determine if now is the right time for you to make your move.

The pandemic and its shutdown of social interaction has had a chilling effect on the housing market, much like a spring blizzard blindsides the early daffodils.

Many buyers and sellers are exiting the market, data suggest, as concerns about job security and health cause people to put life-changing plans on hold. “I’m calling it the Great Pause,” said Tommy Choi, a real estate agent at Keller Williams Chicago-Lincoln Park.

“There won’t be a spring selling season this year, that’s for sure,” said Ron DeVries, senior managing director at appraisal firm Integra Realty Resources.

What that means for prices remains guesswork, but the issue is vital to homeowners who remember the ruinous decline in housing values during the 2008-09 recession. Circumstances are different this time and there is no historic precedent to guide analysts, so expert opinions to vary about the direction of housing prices.

For renters and their landlords, the picture is mixed. A little leverage has shifted to the tenants, as evictions currently are on hold. With the spring a popular time for lease renewals, fewer building owners are pushing for rent hikes, fearful they’ll only get vacant apartments in the bargain. “For a lot of landlords, the big question is what’s going to happen in May,” said John Kennedy, executive vice president of operations at Chicago-based Evergreen Real Estate Group, which owns or manages 8,500 units, mostly in the Midwest.

A similar hold-your-breath attitude is common among experts in the for-sale market. Geoffrey Hewings, who analyzes housing sales as emeritus director of the Regional Economics Applications Laboratory at the University of Illinois, said the pandemic’s negative effects on the market will increase.

“I’m a lot less optimistic than most folks,” he said. Hewings, who compiles monthly reports for the Illinois Association of Realtors, said as layoffs and economic pain spread, there could be a spike in foreclosures this summer.

“It depends on how long the lockdown lasts and the effect it will have on people,” he said. “A friend and I were talking about when we’d feel comfortable going to an opera or a baseball game. Probably not this year. So are people going to feel comfortable going out looking at homes?”

Hewings’ most recent report for the Realtors, covering March, picked up only pre-pandemic business and showed things humming along in the Chicago market, with average prices and sales volumes both rising. The tougher news will come when April’s analysis is done.

Redfin, which crunched Multiple Listing Service data for the week ending April 10, found prices flattening in the Chicago region and a 25% decline in active listings compared with a year ago.

Looking at MLS data within the city itself, the Chicago Association of Realtors found a more than 60% decline in new — as opposed to active — listings compared with a year ago for the week ending April 11. It said the year-over-year inventory was down 20% for single-family detached homes.

“Housing inventory will continue to be a problem,” Hewings said. During the last recession, the inventory reached an 18-month supply, and now it’s down to just a couple of months.

Choi, past president of the Chicago Association of Realtors, said constrained inventory may stabilize prices in the coming months because it could lead to more bidders per listing. “We were starting to see a shift from a seller’s to a buyer’s market even before the pandemic,” he said.

He also said there are indications of pent-up interest from buyers. Mortgage brokers are saying they are writing more pre-approval letters for buyers, Choi said, and online searches of listings have increased as people have sheltered in place.

Showings continue but now are often only virtual sessions, or physical meetings subject to state guidance that limits them to four people.

One thing that confounds the experts is they can’t use anything in history to judge the pandemic’s impact on real estate. The Great Recession of ’08-09 was fueled by debt, so it hit housing more than other sectors. COVID-19’s reach spans the economy. “It can be comforting and it can be scary that we’re all facing this at the same time,” Choi said.

For Hewings, it comes down to one observation that applies, pandemic or not. “When people are concerned about their jobs, the last thing they want to do is invest in the housing market,” he said.