Believe It: Sexually suggestive street names hurt home values
By John Maxfield from The Motley Fool
Do you live on Dutch Oven Avenue in Salem, Ore., and own a vacation house on One Hoe Lane in the Caribbean island of Saint Martin? If so, then I have bad news for you.
A recent study by NeedaProperty.com found that “properties on streets with the rudest, most embarrassing names in [England] are worth an average of 84,000 pounds less than similar properties close by.”
That’s right… according to the real estate website’s research, a rude-sounding street name reduces property values by an average of 22%. Bet you never thought of that when you were shopping for a home.
The one upside revealed by the study is that people who aren’t offended by innuendo-laden street names could very well use the information as a bargaining chip in negotiations. As the authors note (emphasis added):
60% of Brits admitted they would be put off living on a street if it had an embarrassing name. But for the 40% who aren’t so concerned about how others react to hearing their address, it seems there could be bargains to be had on roads such as Crotch Crescent [and others that are even less appropriate].
Not content at that, NeedaProperty.com asked more than 2,000 British adults to vote for the most embarrassing street names to live on. The generated list was too provocative to enumerate here.
The point being, it makes sense why homeowners would be hesitant to print up stationary and return-address labels if their houses happened to be located on any of the identified streets.
According to a resident who lives on one of them, quoted by the U.K.-based Mail Online, “If you’re ever ordering anything and tell people your address, as soon as you say [omitted street name], they know exactly where you mean.”
On a more serious note, the study reveals — albeit inadvertently — the many factors that need to be taken into consideration when buying a home. In theory, for instance, the value of residential property equals the discounted cash flow that you could get from renting it out.
Let’s say you could rent out your home for $1,500 each month, and that it costs you $1,300 a month in mortgage expenses, maintenance, and taxes. Your annual free cash flow would be $2,400. Project that into the future, and discount it at the desired rate, and that’s the true value of your home.
By comparison, now let’s say that your house is smack dab in the middle of Crotch Crescent Court. If renters are less inclined to assume the address, then you might be forced to lower your asking price for rent. As the preceding example demonstrates, this would have a direct impact on the property’s economic value.
At the end of the day, who would have thought a rude-sounding street name could have such a significant impact on the price of the average home? Well, after reading this, I suppose you would have.
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