Are speed bumps a big deal for value? That’s what a friend asked me, and since she gave me permission to share her situation with a neighbor, I hoped we could chat. If someone asked you, how would you respond?
The situation: My friend said, “We live on a busy-ish street with lots of kids walking to and from school, and neighbors are talking about requesting speed bumps to slow cars down. One neighbor who is against this says, “adding speed bumps will decrease the value of a home by 20%.” What do you think of that?”
My response: I’ve got a few things on my mind.
1) Making value claims: Whenever someone makes a value claim, my market antennas go up. What is 20% based on? Is it just an arbitrary number? Or is it based on market research? A study? Does it even seem realistic? These are questions we have to ask to have an informed conversation.
2) It’s busy already: Speed bumps are usually installed because the street is busy and has traffic issues, so there might actually already be a negative impact on value because of the busy street. To be clear I’m not saying speed bumps cannot potentially negatively impact value, but let’s not forget the busy street in the first place, which could be the bigger issue for value.
3) Crunching numbers with logic: Thinking logically is actually one of the best things we can do when having value discussions with neighbors. Sometimes we just need to step back from our ideas and start talking numbers. For instance, if homes are selling for $400,000, and your neighbor is correct about a 20% reduction in value, would these homes really sell for $320,000 if speed bumps were installed? Does that sound reasonable? Does it seem logical for buyers to make a reduction that large based on what you know about the neighborhood market? Moreover, if your neighbor listed his house for sale, would the list price be anywhere close to 20% less if there were speed bumps?
4) The noise factor: To be fair your neighbor is smart to think critically about this issue because we have to consider what speed bumps will do for traffic, the feel of the street, and noise. I recall talking with a city planner once who said neighbors would complain about a busy street and request speed bumps, but after they were installed the same neighbors would complain about the noise of the bumps when cars were speeding over them. Could noise be an issue?
Anyway, that’s how I answered my friend. If you notice, I didn’t make a specific value claim on purpose because as an appraiser I can’t just make stuff up without really supporting the value I say exists. Sorry if that’s frustrating, but for me the big takeaway here is actually how important it is to sometimes step back from our ideas and think critically about value issues. At the same time I’m hoping to open up some conversation, so I would absolutely love to hear your take.
Questions: How do you think speed bumps might impact value? Big deal or no biggie? Do you think it’s possible to measure the impact of speed bumps? Why or why not? What is #5? Did I miss something?
If you liked this post, subscribe by email (or RSS). Thanks for being here.
Great question Ryan. I think you could measure the impact on value from speed bumps, but it would take a scientific study and probably not the scope of work in a typical appraisal assignment. You could look at the trends of property values where speed bumps have been installed or along road where there are sections with speed bumps and without. My gut instinct as an appraiser is that there would be little or no measurable influence on value from speed bumps. However, I can see how the car noise could be increased from the slowing and accelerating that the speed bumps create. If your house happens to be right in front of one of the bumps, that could suck more for the owner or have more of an influence on value if there is one (In my area they put in the big speed hills about every three or four houses and not bunches of little bumps that could have a different influence). On another note, my kids love to go to the roads with the bumps and jump their bikes and boards, so families with bike and board age kids might find it a draw to live at least near the bumps 🙂
Thanks Gary. I always appreciate your take. I think you’re correct about a scientific study. I think we’d have to question the type of bumps too. Honestly I think owners who have had problems with the sound of bumps in front of their houses will not buy another house near a bump, but are others aware? Is this one of those things you don’t know until you know? Those are reasonable questions to ask.
Funny about the kids too. Like the saying goes, “One man’s bump is another man’s jump….” (made that up (obviously)).
ROFL That is too good. I wish I had a good response, but I don’t.
I have sold houses in the same neighborhood on streets with and without speed bumps. My anecdotal experience would indicate that speed bumps do not affect the value at all. Another piece of anecdotal evidence is based on what buyers say to me when we are looking at homes. I have never heard a buyer mention speed bumps one way or the other. I have shown plenty of homes on streets with and without speed bumps and the subject never came up. I have sold homes directly in front of a speed bump, and no one mentioned it.
I agree with your assessment that a busy street would have an impact on the value of the home, but speed bumps are not usually on the busy streets because they are thoroughfares and we don’t usually see speed bumps on main roads. I typically see speed bumps on the roads I would use as a shortcut between neighborhoods. The result is that I avoid roads with speed bumps thus making them quieter. Therefore, speed bumps may actually increase the value of the homes on the road because that road will be less busy.
Jim, this is great. I love hearing your thoughts. I think there is something to buyers not saying much. If buyers aren’t mentioning it, it’s probably not a huge issue. I’m like you too in that I tend to avoid roads with speed bumps as much as possible. I think you are correct in bumps not being on main roads on the outside of neighborhoods, though sometimes they make it on main roads that cut through a neighborhood.
For what it’s worth there are other ways to mitigate traffic too. I’ve seen cities paint bike lines on streets to help give the appearance of a street that has less space for cars and is essentially squeezed together a little more tightly (because of the addition of the painted bike lanes). I’m not sure if that really works, but I’d be curious to see research on the subject.
20%?!?! That’s crazy talk. No way speed bumps, humps, tables or whatever you want to call them are having that kind of impact on value. More like 1% or less.
Here are the things people care about most:
1) Size and Features of Home (# of bed & bath, layout, upgrades, etc.) 45% of consideration in making a decision
2) Neighborhood Quality (crime, amenities, prestige) 45% of consideration in making a decision
3) Peripherals (school ratings, proximity to freeways, local church community, etc.) 10% of consideration in making a decision
Speed bumps fall into the peripherals category. They will only matter to a select group of people. Usually people with kids playing out in the street, or old people who hate all the noise.
Usually, a certain percentage of people on the street have to agree to them, and if they do agree it’s usually because speeding is a problem in the neighborhood.
For example, I live on a street that is the main throughway into the neighborhood we live in. Just a few stop signs to slow people down… but in between them people are driving way over 35 mph.
If anything, this makes the property value go up in my opinion. It prevents a potential problem, and it’s usually one that existed before they were installed. But to think it will drop the property’s value by tens of thousands of dollars is ludicrous.
Hi Wes. Good to hear your take on things. I always appreciate it. Thank you for the detail too.
I do like that many areas require a majority of residents to agree because it would be an unfortunate unilateral move for a city or county to all of the sudden install bumps without residents being in the loop. I’m sure that happens in some areas, but hopefully it’s not too common.
I think you are right that bumps are evidence of a problem that existed before (and maybe after) the bumps were installed.
I always like to look at something a little out of the mode by asking this question. Is the item of concern going to impact sales in a down market. Sometimes in a market with no inventory buyers who have put in multiple offers will overlook just about everything in order to buy a home. So that said, maybe it is prudent to look back in time 2009 or so to see if the speed bumps really do impact value. I don’t think that will need a full on economic analysis by two PHD’s. But who knows. As always Ryan great thought and truly enjoy your blog.
I love it Brad. That is such a good question to ask. I concur with you that when the market is hot we can overlook certain aspects of a property or location. Yet when the market changes and inventory increases, buyers get even more picky. I think we even see that with a busy street when inventory is very tight compared to when there is an oversupply.
On a separate but related note I will say the interesting thing about today’s market in my area at least is despite low inventory buyers seem more finicky about condition and location. I think in part this is due to many buyers not wanting to make the same mistakes they made before the “bubble” burst. Thus buyers simply expect more and want a better product. But part of this phenomenon might be due to many years of investors buying junk and rehabbing it too. At one point our housing stock was over 70% bank-owned in Sacramento County, and a great number of these properties were upgraded, and then sold on the open market. In short, houses simply look so much better these days. When everything went into foreclosure there were so many homes that could not have qualified for conventional financing, so they had to be upgraded. Of course trends in upgrades changed with new construction too as inventory increased. I think we all saw granite become a standard rather than a major upgrade like it used to be. I would guess the advent of HGTV and DIY Network has helped speed along the desire for certain upgrades too. Anyway, these are just some random thoughts. I welcome anyone’s take.
It’s great to hear from your agent friends, Ryan. Many times there is not enough hard data to determine if there is a value impact for something like this. Whenever this is the case I believe it is helpful to talk to agents who talk with buyers all the time and have valuable information from their perspective. This is actually a valid technique taught in appraisal classes.
Thanks Tom. I’m so glad you mentioned that. I think there is something to that because talking to informed market professionals can be huge for understanding the market. I am appraising something a little weird right now, and I plan to call several brokers in the neighborhood to bounce some ideas off of them. In this case I would guess answers would be very wide about speed bumps.
this retired commercial appraisal says market value supports the loss of value. Seen large shop malls
lose majority of customers. Shopping fun and drivers no want their NICE car scraping the “bump”=thousands of dollars to repair under-
carriage of your Ferrari/Corvette+
This retired commercial says -it does adversely
impact value. People with NICE cars(Ferrari-Corvettes no like $$$$damages to undercarriage
of car. Any business with speed bumps tells me to STAY AWAY-so I do. Ten years ago Nevada large mall opens-two months later “speed bumps” installed. Two months later 50% business gone.
Richies who owned mall($ makes you smart- they thought) they DUG their heels in-year later-talkof
imploding the mall! Suddenly “bumps” replaced by friending “nobs” only 2′ high slowed traffic and business came back after a YEAR! Sorry speed “bumps” first pick of the LOW IQers.
Thanks John. That’s a different layer of value for sure. I appreciate you bringing in the commercial aspect. I think I would feel similar if I had a luxury vehicle.
By the way, you now have one commented posted, so you can now comment any time. I moderate the first one always because there are so many spam comments that need to be caught and not make it on the blog.