How neighbors impact your property value

Unattractive yards, foreclosures, and constant noise can affect the resale price of your home because they bring down the average home values in the neighborhood.

Can your neighbors affect the value of your home?

As a homeowner, you’re likely enjoying the security of rising property values. You probably take great care of your home, making sure it’s neat, tidy, and well-maintained.

But one concern you may have is whether the condition of your neighbor’s property has any impact on the value of your house. The short answer is yes — A neighbor’s property can affect the value of your home. Here are a few ways it can happen.

Visual annoyances

Rows of white picket fences and manicured lawns may not be your dream, but home values typically remain stable because everyone cares for their property. Unfortunately, when one house becomes unsightly, the whole neighborhood can be affected.

What kinds of eyesores hurt property values? The biggest issues include:

  • Unkempt and overgrown yards
  • Yard destroyed by pets
  • Garish colors that don’t fit the neighborhood
  • Peeling paint
  • Broken or boarded windows
  • Graffiti
  • Signs of hoarding
  • Old cars and junk visible from the street

This describes the house people really notice when they drive by. And it’s certainly the one appraisers see as they try to determine the value of your home.

According to the Appraisal Institute, when an appraiser determines the value of a home, they must keep surrounding properties in mind. When one property is a mess, it decreases the value of the houses around it — often by 5% to 10%.

Appraisers call this “external obsolescence.” It’s depreciation caused by external factors that are not on the property itself. In other words, it’s not your fault as a homeowner, but it still impacts the value of your house.

Legal problems

Before the internet, it was hard to know if the guy living next door was a sexual predator, or if the woman across the street spent years in prison for embezzlement. Today, anyone interested in moving into your neighborhood has easy access to scads of information about your neighbors.

For example, suppose a person on the sex offender registry moves in next door to you. You can expect the value of your home to drop by an average of 12%. Even if they move in on the same block, your home value will probably drop by about 4%.

You don’t have much control over what your neighbors do once you’ve moved into a neighborhood, but you can check who lives nearby before offering to purchase a property yourself.


The impact of foreclosed properties on home value is another thing you can’t control. But simply being located within a quarter-mile of a foreclosed home can decrease the value of your property by 4%. So, if your home would be worth $500,000 in any other neighborhood, its value is likely closer to $480,000 if there’s a foreclosure nearby.


Noise pollution of all types can impact property value. Many homebuyers don’t want to live in a neighborhood near main roads, railroad tracks, busy intersections, or industrial and commercial areas.

But what about unacceptable noise generated by an inconsiderate neighbor? Loud music at all hours, regular late-night parties, obnoxious power tools, and noisy cars can all make your neighborhood a miserable place to live.

Rowdy neighbors and environmental sounds can definitely make your home seem less desirable to a prospective buyer. If they’re persistent and inescapable, they can decrease the value of your property by 1% to 10%.

Loud or hostile animals

If your neighbor leaves their dogs outside to wail and bark all day and night, it impacts the value of your home. And if a neighbor has an aggressive breed of dog, you can expect the value of your home to decrease. Put yourself in the shoes of a potential homebuyer. Would you be willing to take on a sizable mortgage, only to be nervous about spending time outdoors?

What you can do

You obviously can’t control your neighbor’s behavior, habits, or lifestyle, but you can try to be understanding before taking any drastic measures. Here are some options if you’re concerned about a neighbor’s property:

  • Talk to them. It’s possible the yard is overgrown or paint is peeling because the homeowner is too sick or too old to take care of maintenance. If that’s the case, you might offer to help out.
  • If the neighbor in question is a senior citizen, call the appropriate local agency to learn if any programs are available to help a senior make repairs to their home.
  • Involve your homeowners association (HOA). If you live in an HOA-managed neighborhood, ask them for assistance. If a single property is hurting the value of surrounding homes, it’s in the HOA’s best interest to get involved.
  • If talking to your neighbor doesn’t help, you can try contacting your city’s code enforcement department.

Even if you believe your neighbor’s house is devaluing the homes around it, the wisest course of action is to broach the subject carefully and with compassion.



portrait kristen wilson
About Kristen Wilson

Kristen Wilson is a licensed loan officer and owner at Network Mortgage in Chico, California. She has been helping clients with mortgage financing for over 25 years.

CA DRE: 01146146 / NMLS: 238825