If you are a homeowner, you may see no downside to 3 or 4 empty houses on your street. Your neighbor lost their home to foreclosure, the bank now owns it, it will clear itself up over time. What difference does that make to you, right? Well, empty houses represent far more than simply neighborhood blight and can translate into real financial losses.
I read a news story this week that was rather startling. 13 percent of the homes in America are currently vacant. Think about that for a moment. That means about 1 of every 7 homes is empty. There is no doubt that we are truly in historic financial times. The state of Nevada alone has more than 167,000 empty houses. This week I want to examine how empty houses in your neighborhood may financially impact you.
1. Empty Houses Mean Lower Appraisals
Appraisers must consider the value of similar size homes in your neighborhood when making value estimates. Whether you are planning to sell, or just refinancing, your appraised value will be affected by the glut of foreclosed homes on the market.
2. Empty Houses Likely Mean Higher Taxes
Local municipalities are facing substantial expenses in dealing with vacant homes. There is the rising issue of squatters. Yes, people move right in and many times get away with living in a vacant house for months before law enforcement removes them. To prevent this, may cities are boarding up vacant houses. They also must cut the grass, drain swimming pools, remove garbage left behind. Many of these costs can be passed along to the bank holding the mortgage, but not all. The impact of these costs to local cities is substantial and on the rise.
3. Loss Of Curb Appeal
Nothing will ruin a nice neighborhood like a 2 or 3 houses that are sitting empty and not being maintained. You may find it very difficult to get anywhere near your appraised value, especially if you are situated next to a vacant home.
4. Empty Houses Mean Bargains If You Are A Buyer
If you are a buyer, you can find properties so cheap it is almost unbelievable. Recently, I used the website Realtor.com to see what home prices were in two of the most hardest hit cities; Detroit and Las Vegas. My search criteria was for a 4 bedroom 2 bath home. In Detroit I found pages and pages of listing for below $10,000. Yes, buy a house for less than $10,000. A similar search found 4/2 homes in Las Vegas in large supply at $35,000 -$40,000.
5. Empty Houses Mean Lower Rental Rates
If you own real estate you are renting out, you will not be getting top dollar these days. Neighborhoods with empty homes face even more pressure to offer discounts to renters. In my own neighborhood, 10 minutes from the beach, 2,500 square foot homes are renting for $800 monthly.
On the street where I live there are 4 vacant homes. I happen to live next to one and across the street from another. Although we are uncomfortable with the situation, we were beneficiaries of the down real estate market here in Florida. We purchased our current home for less than half of the original new construction price it sold for 5 years ago.
We have dealt with squatters, burglary, six foot high grass, utility theft, and a host of other issues. Our neighborhood is upper-middle-class and only 2 blocks from mansions on salt water canals. I guess if it is happening where we live, it is no surprise that it seems to be happening everywhere these days.
Helping you make the most of God’s money!