Dive Brief:

• A Realtor.com study of how various neighborhood features affect home values and found that proximity to bad schools (-22.2%), strip clubs (-14.7%) and a high concentration of renters (-13.8%) have the most negative impact.
• In addition to the three most detrimental features, the real estate site also found that homeowners living near homeless shelters (-12.7%), cemeteries (-12.3%), funeral homes (-6.5%), power plants (-5.3%), shooting ranges (-3.7%) and hospitals (-3.2%) could also expect to see reductions in their home values. 
• Realtor.com, which studied the country’s 100 largest real estate markets, said that location affects home values more than any other factor, but cautioned that it cannot be sure whether the data reveals a correlation between low prices and neighborhood features, or causation.

Dive Insight:

So why are these neighborhood features considered "a drag" on home values? Realtor.com said that although negative hits to values in the 3% range are no big concern, the prospect of ambulance sirens and the noisy activity that often surrounds medical facilities and emergency rooms repel some buyers. And aside from the noise of shooting ranges, the site said some prospective homeowners might be concerned about the negative environmental effects.

Power plants, on the other hand, primarily generate concerns over safety, and Realtor.com said homeowners are hesitant to buy near a funeral home because of traffic concerns and the "creepy" factor those buildings tend to embody. Similarly, homes near cemeteries carry that "sinister" air as well. Homeless shelters also negatively affect home values, Realtor.com said, due to apprehension around the type of people who use those facilities and the typical increased police presence.

A large number of renters in the neighborhood also has a significant impact on home values, primarily because of the perception that renters don’t take care of their homes as well as a homeowner would, thereby raising the possibility that those homes will bring down the property values of others. And strip clubs? The site said they come with strippers, typically alcohol, and a lot of people coming and going late into the evening.

Finally, even more than strip clubs, bad schools have the most significant negative impact on a home’s value because a school with a "bad" rating of one to three out of 10 at greatschools.org is usually indicative of a not-so-great neighborhood, according to Realtor.com.

These results also apply to homebuilders looking for ideal locations for their new properties. Builders considering neighborhoods with these features should be sure to weigh the positives of possibly cheaper land with the negatives of lower home values.