Your neighbors’ home values are important because they impact your own home value. Small things like an unkempt lawn here or there are not likely to cause a long-lasting drop in your home value. But if you’re the only maintained home on the block, that’s likely to have a negative effect on your property’s valuation. Although it may not seem fair, this is due to the external factors that are considered when calculating a home’s value. A run-down neighborhood is not going to be attractive to potential buyers, so the houses will, naturally, score far lower than homes on a manicured cul-de-sac a few short miles away.
Beyond mild disrepair, if your neighbors are suffering financially, you might see your property value take a hit. The surest sign of this is foreclosures. If foreclosures are cropping up in your neighborhood, this probably signals a decline in your home value. If the foreclosed structure is also vacant or abandoned, this will amplify the negative consequences.
Aside from cosmetic and financial problems, if some of your neighbors have criminal backgrounds, it could take a bite out of your home value. Even if your neighbors haven’t run afoul with the law, if they tend to host loud parties and raucous events, this can also damage the resale value of your home. Many neighborhoods have homeowners’ associations (HOAs) to address these issues directly.