Study: Multiple Sex Offenders Can Affect Real Estate Values

Nov 22, 2013

The saying, “birds of a feather, flock together” refers to people of similar character, background, or taste congregating and associating with one another.

It’s a “common thread” that leads like-minded people to live near each other in neighborhoods.

But what happens when that common thread is a sexual offense?

When one sex offender moves into a neighborhood, another is likely to follow. Sometimes, even two or three more follow … and THAT’S what has some home buyers and sellers concerned in neighborhoods across the country, according to the findings from a study conducted by several Longwood University professors.

Dr. Bennie Waller is one of those professors.

“we have conducted around impact of market externalities as they relate to sex offenders and specifically tried to gauge how sex offenders might impact marketing outcomes of residential real estate, ie selling price, time on market and marketing duration.”

The study finds that when an offender moves into a neighborhood, AND if others follow, a kind of “tipping point” develops.

"the concept of tipping comes back from discriminatory practices in real estate, where after so many of a certain race or class would were to move into an area would really cause people to really start selling, “blockbusting”.

By definition, “blockbusting” is an illegal method of manipulating home owners to sell or rent their homes, at a lower price, by falsely convincing them that racial, religious or other minorities are moving into their neighborhood.

“…The manner in which we examine it is the fact that the impact it has on selling price and marketing duration, one SO living nearby, the impact of 2 or 3. Really we mean it from a perspective of economic impact. At what point should a home buyer or seller be cautious and conscious of whether or not to buy or sell in order to protect themselves in terms of the economic impact that it may have on them.”

While Dr. Waller would rather not specifically disclose where the study was conducted, he does say the area is a mid-size market in Central Virginia, and includes nearly 20,000 real estate listings between 1999 and 2009. In other words, a typical midsize city, and not a distressed or racially (charged) community as many would expect.

"…we tried very hard to control for neighborhood effects, using census blocks groups, other econometric techniques to control for low income or various economic impacts it may have, so we did control for that and even after controlling for the neighborhood it was still a negative effect. Keep in mind that SO cannot live in certain areas, so the very nature of the legality forces them to not reside in certain places, so it does delineate where they can and can’t live."

The data shows that the presence of just one registered sex offender within one-fourth of a mile was found to have a significant effect on home prices and liquidity. On average, it takes 52 more days and 47-percent longer for houses to sell in in that neighborhood.

“…general finding is that as more SO congregate, the longer it takes for a property to transact. The concept is analogous, might relate it to foreclosure. When a first foreclosure happens its bad, but when 2 and 3 and 4 happen, it gets really, really, bad.”

The Longwood University study is an ongoing project and several more studies are expected on the subject.