15 Factors That Decrease Home Value (And What You Can Control)

Home appreciation isn't guaranteed. Plenty of factors can drag your property value down—some you control, some you don't.

Understanding what hurts value helps you protect your investment and avoid nasty surprises when it's time to sell or tap equity.

External Factors (Out of Your Control)

These affect your value regardless of what you do with your property.

1. Market Downturns

When the broader market drops, your home drops with it.

2008-2011: Average U.S. home prices fell 33%. Some markets (Phoenix, Las Vegas, Miami) dropped 50%+.

What you can do: Nothing directly. But if you're buying, understand market cycles. If you're holding, maintain long time horizons to ride out downturns.

2. Rising Interest Rates

Higher rates reduce buying power. When mortgage rates jumped from 3% to 7% (2021-2023), the same monthly payment bought 30% less house.

Impact: Fewer qualified buyers = softer demand = lower prices (or slower appreciation).

3. Major Employer Leaves

When a big employer closes or relocates, local home values suffer.

Examples:

• Detroit after auto industry contraction
• Small towns after factory closures
• Company towns when the company leaves

One employer representing 10%+ of local jobs can significantly impact an entire market.

4. School District Changes

School quality drives family home-buying decisions.

Value killers:

• District boundary changes (your home rezoned to worse school)
• School closures or consolidations
• Declining test scores or ratings
• Loss of key programs

Homes in top school districts command 10-20% premiums over comparable homes in weaker districts.

5. Crime Increases

Rising crime rates—or even perception of crime—hurt values.

Direct impact:

• Buyers avoid the area
• Insurance costs rise
• Harder to get good comps
• Rental demand may drop too

A neighborhood trending unsafe can see 5-15% value decline relative to similar areas.

6. Undesirable Development

What gets built nearby matters:

Value reducers:

• Highways or major roads (noise, traffic)
• Power lines or substations
• Industrial facilities
• Landfills or waste processing
• Large apartment complexes (in SFH areas)
• Prisons or halfway houses
• Adult entertainment

Value boosters:

• Parks and green space
• Good schools
• Retail and restaurants
• Transit stations (usually)
• Hospitals (usually)

You can research proposed developments, but you can't stop them.

7. Environmental Problems

Some environmental issues devastate values:

Major concerns:

• Flood zone designation changes
• Wildfire risk zones
• Soil contamination discovery
• Water quality issues
• Sea level rise projections
• Radon or other natural hazards

Homes in high-risk areas may become uninsurable or unlendable—effectively worthless to most buyers.

8. Neighborhood Decline

The area around you matters as much as your property.

Signs of decline:

• Increasing vacancies
• Foreclosures and short sales
• Deferred maintenance on neighboring properties
• Commercial vacancies
• Loss of services (grocery stores, banks)

One neglected property can drag down an entire block.

Internal Factors (Things You Control)

These are within your power to address—or cause.

9. Deferred Maintenance

The slow killer of home value.

Common issues:

• Roof past its lifespan
• Aging HVAC systems
• Old water heaters
• Deteriorating siding
• Worn windows and doors
• Plumbing and electrical past prime

Buyers see deferred maintenance and either walk away or discount aggressively. A $400,000 home needing $40,000 in deferred repairs might sell for $340,000—buyers add their own cushion for unknowns.

Prevention: Budget 1-2% of home value annually for maintenance. Address issues before they compound.

10. Poor Renovations

Bad work hurts more than no work.

Value destroyers:

• DIY gone wrong
• Non-permitted additions
• Poor-quality materials
• Mismatched styles
• Over-improvements for the neighborhood

That converted garage "bedroom" without permits? Appraisers won't count it. Buyers will worry about what else was done wrong.

11. Outdated Interiors

Taste changes. What was premium in 1990 is dated today.

Current value detractors:

• Brass fixtures and honey oak
• Popcorn ceilings
• Wallpaper (most patterns)
• Laminate counters
• Carpet in bathrooms
• Closed-off floor plans

You don't need to chase trends, but extremely dated interiors require buyer imagination—and imagination has costs.

12. Unusual Customization

Personal touches can be too personal.

Examples:

• Bold paint colors throughout
• Theme rooms
• Highly specific built-ins
• Converted spaces (bedroom to closet)
• Religious or political displays built-in
• Pools in cold climates

The more specialized your home, the smaller your buyer pool.

13. Stigma

Some events stigmatize a property:

Major stigmas:

• Murder or violent crime
• Suicide
• Notorious previous owner
• Known drug house
• Paranormal reputation (yes, really)

Most states require disclosure of material facts. Stigmatized properties can sell for 10-30% less than comparable homes.

14. Odors and Pests

What people smell and see when they walk in:

Instant turnoffs:

• Pet odors (especially in carpet)
• Smoke damage
• Mold or mildew smell
• Pest evidence
• Musty basements

These trigger immediate emotional reactions. Buyers assume the worst about what they can't see.

Fix: Deep cleaning, remediation, and sometimes full material replacement before listing.

15. Lack of Curb Appeal

First impressions set expectations.

Curb appeal problems:

• Overgrown landscaping
• Dead lawn
• Peeling paint
• Damaged driveway
• Cluttered porch
• Visible trash or junk

Buyers who don't like the outside often don't go inside. Or they go in already discounting.

Good news: Curb appeal fixes are often cheap and high-ROI.

How Much Do These Factors Cost?

Note: These compound. A home with deferred maintenance, in a declining neighborhood, with poor curb appeal could easily be 30-40% below potential.

Protecting Your Home's Value

Monitor External Factors

Stay informed about:

• Proposed developments (attend planning meetings)
• School district news
• Major employer health
• Crime statistics
• Environmental reports

You can't stop external changes, but early awareness lets you plan.

Maintain Consistently

Annual checklist:

• Roof inspection
• HVAC service
• Water heater check
• Gutter cleaning
• Foundation inspection
• Window and door seals
• Exterior paint condition

Small investments now prevent big problems later.

Renovate Thoughtfully

Before any project, ask:

• Does this fit the neighborhood?
• Will most buyers want this?
• Am I adding real value or just spending?
• Should I get permits?

When in doubt, choose neutral over personal.

Address Issues Before They Compound

That small roof leak becomes:

• Ceiling damage
• Mold growth
• Structural rot
• Major remediation

Fix problems when they're small.

When Value Drops: Your Options

Hold Through Cycles

Market downturns are usually temporary. If you can wait 5-10 years, values typically recover.

Improve What You Control

In a down market, focus on things that differentiate your property:

• Address deferred maintenance
• Update key areas (kitchen, bathrooms)
• Improve curb appeal
• Make the home move-in ready

Rent Instead of Sell

If selling would lock in losses, renting may buy time for recovery.

Cut Losses Strategically

Sometimes selling in a down market beats holding a declining asset:

• When local factors are permanent (employer gone, environmental issues)
• When you need to relocate
• When holding costs exceed loss

The Bottom Line

Your home's value isn't entirely in your hands. Markets cycle, employers move, neighborhoods change.

But a surprising amount IS in your control:

• How well you maintain the property
• How thoughtfully you renovate
• How quickly you address problems
• How you present the home

Focus on what you can influence. Accept what you can't. And keep enough equity cushion that temporary downturns don't become emergencies.

---

Want to understand your current equity position? Calculate your HELOC potential →