Between 1988 and 1994, the housing prices fell by 30%. Property values recovered 17.5% by 1998. In 1997, New York was named the “Comeback City.”
Since 1994, the crime rates in New York City have plummeted. According to recent reports, this is part of the reason for our city’s real estate boom.
It is difficult for researchers to isolate crime as a variable because of how dynamic the real estate economy is, but there is evidence that robbery and aggravated assault crimes most greatly affect housing values in a neighborhood.
Crime Rates in NYC
Crime rates in general have fallen since the 1990’s, but they are continuing to hit record lows. In 2017, New York reported only a 3.4 per 100,000 murder rate. Those numbers are comparable to states like Montana and Wyoming that are less populated.
In the past two decades, crime rates have decreased across the nation, but New York’s crime rates are especially noteworthy. In 2017, there were an estimated 290 murders across the state, setting a new record that is an 87% decline from 1990. Going into 2018, there was a 16% decrease in homicide rates in January alone.
Law enforcement attributes the more recent declines to “precision” policing. Their new system has strengthened ties with the community, cracked down on gang violence and focused on getting guns off the streets.
How Crime Affects Property Value
High crime rates can impact many parts of society, and the economy is one.
One study indicated that a 10% reduction in homicides leads to a 0.83% increase in property values the following year. Additionally, there is a nationwide trend of housing prices falling by 4% when within 0.1 miles of a registered sex offender, but this may vary in a highly-populated city like New York.
Although the falling crime rate accounts for about ⅓ of the property value boom since the 1990’s, that isn’t the whole story. The revitalization of the city’s poorer communities plays a role, as well as the city’s investment in subsidized low-income housing and the quality of local schools.
At East River Partners, we develop properties in good neighborhoods where buyers would want to live. Crime rates fluctuate by category every year, but there is no denying that the city is slowly becoming a safer place to live across the board. We can only hope these positive trends continue into the future.