Do street names affect value?
In the Freakonoimics Blog, they talked about an article that I thought was pretty interesting, called “Does a Politically Incorrect Street Name Affect Home Value?” Of course, I’m a real estate dork, so this could all be taken with a grain of salt.
I performed an MLS search for homes in Shady Hollow that have sold since 2000 which are located on the aforementioned streets with gun related names. There have been 71 sales on those particular streets. The average sales price is $179,677, which equals $98 per square foot. I then searched the rest of Shady Hollow, filtering out homes newer than 1993 since all of the aforementioned homes are built before 1993 and we don’t want to polute the results with more expensive newer homes. There were 606 sales of homes with less overt western names. The average sales price is $225,713, which equals $103 per square foot. It appears that the homes with politically incorrect names do not sell for as much compared to other homes in the same subdivision.
The interesting thing is, however, that the politically incorrect homes sold in an average of 37 days while the others took an average of 50 days to sell. This seems conter-intuitive based on the price gap. The politically incorrect homes were an average of 1811 square feet while the others averaged 2144 square feet, which would account for the sales price gap. But smaller homes, in general, sell for a higher per square foot price, and in this case they don’t, which suggests something is out of balance.
I think this is a really interesting question, but I do have to wonder if there aren’t some other factors at play, especially considering the mention of the gap in “time to sell”. Generally, you’d expect that more attractive homes spend less time on the market. The fact that the seemingly less attractive homes sold faster makes me wonder if perhaps the reason they sold quickly was that their prices were considered to be a bargain compared to the other comparable homes. Or perhaps the sellers were more motivated and more willing to negotiate on their sale prices, especially if the neighborhood conditions on those streets had recently changed.
I also wonder about the condition and average age of the less attractive homes. Perhaps they were smaller and lower priced because they were all located in an older part of the subdivision. Although the writer did try to account for this by screening out all homes built after 1993, they do not mention if the average age for the “good” homes is any different than the “bad” ones. This could also account for the lack of a higher price per square foot in the smaller homes, which is usually expected.
Anyway, I love data and I love real estate, so this kind of stuff is right up my alley.
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