10 Things That Can Bring Down Your Property Value

What brings down home and property value?

  1. Bad neighbors
  2. Address suffix
  3. Increasing mortgage rates
  4. Natural disasters
  5. Neighborhood foreclosures and short sales
  6. Lack of curb appeal
  7. Poor maintenance
  8. Too much carpet
  9. Excess clutter
  10. Unnecessary or poorly done "upgrades"
In this article:

As a property owner, you probably concern yourself more with projects that increase property value. But while there are many great ways to increase property value, there are just as many — if not more — things that can decrease your property value.

Generally, property values increase over time. But that’s thinking in more of a generational timeline rather than an immediate one. Over a period of weeks, months, or even years, property values may fluctuate due to many factors. Some of these factors are within your control, but many are not.

You can’t do anything about certain factors driving down your home value, but knowledge is power. Knowing how your property value could change should impact how you approach managing or selling your home. Here, we’ll discuss factors both within and outside of your control that bring down property value.

Factors outside your control that bring down property value

Again, in the long view, property values tend to increase. The national home value appreciation average is 3.5% to 3.8% each year, but that is far from a hard and fast rule. Different markets appreciate or depreciate at different rates. That said, it’s good to be aware of these factors beyond your control that may bring down your property value.

1. Bad neighbors

Believe it or not, your neighbors could hurt your property value. A neighbor with junk all over the yard, an ugly house, or loud dogs or frequent parties next door all could make someone less inclined to buy your house, thereby lowering its value. You’re entitled to know a little bit about your new neighbors, so make sure to ask for any necessary disclosures.

2. Address suffix

Another strange one, the name of the street you live on could increase your property value by up to 36%. Research shows that homes on boulevard, place, and road addresses have higher values than streets, drives, and avenues. 

3. Increasing mortgage rates

Low mortgage interest rates mean buyers can afford to spend more on a property because their monthly mortgage payments will be less, lowering the overall cost of a loan. As such, increasing interest rates lower the purchasing power of prospective buyers. When the collective purchasing power of buyers is lower, people can’t pay as much for your home since they will have to pay more interest fees over the lifetime of the mortgage. It’s less likely someone will pay over asking price because the pool of prospective buyers shrinks.

As such, when interest rates are high, you may have to list your home for less than you’d like in order to appeal to more buyers.

4. Natural disasters

A few blizzards and rainstorms every year won’t hurt your property value, but climate events certainly can. Natural disasters like hurricanes, tornadoes, wildfires, earthquakes, tsunamis, mudslides, and floods can all hurt your property value.

A well-known example is Hurricane Katrina in 2005. Property values in the New Orleans Metro area sagged considerably after the disaster. Some areas are still experiencing lagging property values more than a decade later.

While natural disasters can devastate an area, making it less desirable to live there, climate change is another factor to consider. Maybe you bought a home 20 years ago, and in that time, rainfall has increased significantly. If local infrastructure wasn’t prepared for that kind of increase in rain, the area may experience more frequent flooding, requiring you to purchase flood insurance. In the future, people will hesitate to buy a home in a flood zone, lowering the value of your property.

5. Neighborhood foreclosures and short sales

One of the primary factors home appraisers and real estate agents use to determine the value of your home is by analyzing recent sales of comparable properties in your neighborhood. If those properties are sold under foreclosure, that’s bad news for your property value.

Consider this: Your home has four bedrooms, three bathrooms, and is 2,000 square feet. One comparable home in the neighborhood sold for $450,000 and another sold for $435,000. A third, however, was foreclosed on and sold for just $250,000. That third sale drives down the average price of comparable homes in your area, meaning your home will probably appraise for less.

If a neighborhood has a number of foreclosures or short sales, it doesn’t really matter whether those homes are comparable to yours or not. Multiple foreclosures or short sales make prospective buyers wonder if a neighborhood is stable or if they can trust the investment potential of a home. Even if buyers are interested, they’ll want to negotiate the price down due to the apparent volatility of the area.

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Factors within your control that bring down property value

Of course, you have the power to change your property's value. Things like adding square footage or a bathroom can increase property value, but understanding the following factors can also help you avoid hurting your property value.

6. Lack of curb appeal

We’re casting a wide net with this one because “curb appeal” is a pretty general statement. Curb appeal refers to the impression people get when seeing the home. A home with nice curb appeal entices prospective buyers and helps sell your home faster. 

A home that looks like it needs work from the outside inspires doubts in buyers and may cause some buyers to not even look at your home. Plus, it’s going to fall on them to make the house look nice again, which may encourage them to reduce their offer.

Some things you can do to improve curb appeal:

  • Update the exterior paint with a fresh coat and attractive color.
  • Update the exterior lighting with new fixtures.
  • Update your worn fence with a prettier one.
  • Hire a professional landscaper before putting your house on the market to get the front yard in great shape.
  • Wash the windows and siding.
  • Replace an old, worn front door with a new one.

7. Poor maintenance

When something breaks, fix it. Not that hard, right? Well, after you’ve been in a home for a while, you might get tired of putting so much money into fixing up every little thing that goes wrong. But failing to do so will hurt your property value.

Not only will prospective buyers lower their offer if they find out the home needs significant maintenance, but they may not make an offer at all if they feel the work doesn’t justify the cost.

The longer you sit on a maintenance problem like a leaky faucet or sputtering HVAC system, the harder and more expensive it will be to fix. If you don’t know how to fix something, hire someone who does. Pay special attention to your roof, foundation, gutters, HVAC system, and pest problems. These are repairs you want to make immediately.

Additionally, maintenance extends to the paint on your walls. Just like exterior house paint, chipped, low-quality, or just plain ugly interior wall paint can lower your property value. Paint costs money — nobody wants to pay to fix a problem you allowed to persist.

8. Too much carpet

When you first put that carpet in all over the house, you loved that you could walk barefoot everywhere. You got all cozy on it watching movies. But after a few years, the occasional spill and the constant presence of your bare feet have made the carpet, well, gross.

Unless you’re cleaning the carpet regularly, it’s going to show signs of heavy use. And if you have carpet everywhere, you probably aren’t paying to have it cleaned regularly. 

Wall-to-wall carpet all over the house can make buyers wary. For one, it may look worn and dirty. Two, carpet tends to collect allergens, which may be an issue for some buyers. And, finally, replacing carpet isn’t cheap.

Diversify your floors. Make sure you have some hardwood, some laminate, and leave the carpet to the bedrooms.

9. Excess clutter

Believe it or not, there’s a threshold of messiness that can start to bring down your property value. It’s human psychology. If someone is walking through your house, it’s hard to see the potential to make it their house with all your stuff strewn about. Why should they pay full price for a home they can’t identify with?

Most of us don’t realize how much clutter we’ve accumulated over the years. Some people are great at hiding it. But just as you clean dust and dirt out of your home regularly, decluttering is crucial when you’re thinking about your property value.

Donate items you no longer need or want, get a storage locker somewhere, or get creative finding permanent homes for the items you rarely use. This is an inexpensive way to add value to your house and it might just feel like a weight off your shoulders.

10. Unnecessary or poorly done 'upgrades'

While additions and home improvement projects often add value to your home, they don’t always add value.

First off, if you want to add a deck, extend the kitchen, or remodel the bathroom, hire a professional unless you’re 100% positive you can do professional-grade work. Even if you’re very good at DIY projects, big remodels and renovations have a hundred little things that could go wrong. You might be able to live with a crooked fixture or some poorly laid tile, but most prospective buyers won’t be.

Likewise, some upgrades might actually make your home less valuable. A classic example is adding an in-ground pool. It’s well-documented that in the Northeast and other colder climates, a pool actually decreases property value

Other undesirable projects include ripping out a closet or bathroom to expand a bedroom or converting a garage into an extra living space. Most buyers would prefer a closet or a bathroom over an extra-large bedroom, and most buyers expect a garage to be a place to park their cars and store their tools.

In short, renovating or remodeling your home can be a smart way to add value, but don’t start a project without considering what you’re losing by making a change.

A house is the most important investment most people make in their lifetimes. It’s only natural to think of ways to improve the value. But if you don’t have the time or resources for major home improvements, you can at least avoid doing things that bring down property value. You have control over some of those factors, and it pays to be aware of the ones outside of your control.

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