Impact of Homeless Shelter Plans on Real Estate Prices

6 Replies

Hey all,

I'm looking to house hack a single-family house/condo in the Austin, TX area however I learned that the city just approved a new homeless shelter to be built very close to where I was looking to buy. Does anyone know how this may impact the price/value of any of the property in the surrounding neighborhoods?

For reference, there is another homeless shelter in Austin (more east-central) that is literally overflowing at all times with homeless people, so I assume the new South Austin shelter would eventually look similar to that.

Common sense would say that obviously it would decrease the value of homes (due to security concerns, etc.), but I was curious if there may be an opportunity there to get a good deal on some property.

Thanks!

@Gus Joseph That is a very intriguing question. The homeless problem is dominating the news nowadays. The mayor is out visiting cities such as Seattle right now to figure out what to do. Since they are allowing the homeless folks to set up tents in the open, ben white at congress going west looks rough. There are many business folks that are raising holy hell. I suspect that we are on the verge of some sorta tipping point. As recently as two days ago, there was a homicide in broad daylight when a homeless guy attacked another one. There have been other incidents too. There was an article in the local paper about a lady trying to sell her house w/o realtor and had found a homeless couple inside it. They had the refrigerator full of groceries, the air conditioner going full blast and beer cans everywhere. Good grief!!  I am also keeping my eye on the entire south austin homeless shelter being built. Maybe the negativity will drive down prices and one can get a helluva deal...hmmm

Originally posted by @Aaron Gordy :

@Gus Joseph That is a very intriguing question. The homeless problem is dominating the news nowadays. The mayor is out visiting cities such as Seattle right now to figure out what to do. Since they are allowing the homeless folks to set up tents in the open, ben white at congress going west looks rough. There are many business folks that are raising holy hell. I suspect that we are on the verge of some sorta tipping point. As recently as two days ago, there was a homicide in broad daylight when a homeless guy attacked another one. There have been other incidents too. There was an article in the local paper about a lady trying to sell her house w/o realtor and had found a homeless couple inside it. They had the refrigerator full of groceries, the air conditioner going full blast and beer cans everywhere. Good grief!!  I am also keeping my eye on the entire south austin homeless shelter being built. Maybe the negativity will drive down prices and one can get a helluva deal...hmmm

Hey Aaron, 

I was just in San Antonio yesterday and was amazed at how low of amount of homelessness was in the open public. I did some research and found that they have a pretty successful homeless shelter program that not only provides shelter and help them get back on their feet. I'm hoping Austin can do the same. 

I drive past the big South Austin homeless encampment daily and it's becoming worse all the time. Junk and trash, people approaching your car at intersections, banging on the windows and demanding you roll them down. There's even a guy who's set up a big ole Archie Bunker-style lounge chair, chilling like he's on a southern front porch. On Monday, I saw a couple of crust-punk kids throwing bags of ice at moving cars in parking lot of the nearby Central Market (basically a regional version Whole Foods) and then ripping around the lot on bikes, cutting off cars. Thankfully, I'm about a mile south of all this, but the houses nearby are experiencing increased property crimes, and I'd have to imagine their sales prices are suffering due to buyers becoming turned off driving through this mess on the way to showings.

I really don't know what effect the big shelter project will have - it could help, or it could make things worse. The "avoid at all costs" awfulness of the area around the downtown shelter doesn't give much confidence. Really do hope it'll help break the cycle and move this stuff in the other direction, and not amplify things. Maybe someone more familiar with the project could comment ...

I'm In Seattle.

This post got long.  sorry.   I am (hopefully) near the finish line in selling a duplex I have in a very cool hipster/artsy/industrial neighborhood of seattle.  However one of the reasons I chose to sell was the growing issue with homeless in the neighborhood.    In that general area there is a whole fleet (dozens to a couple hundred) of derelict RVs that have appeared over the last 3-5 years or so and are being used as shelter.   They almost all have washington plates,  but they sure didn't come out of backyards in Seattle proper.   We also get tent camps and open air junk bazaars sometimes with as much as few dozen residents appearing sometimes overnight.   To be fair the vast majority of said people keep to themselves and don't bother neighborhood residents.   However there is a not insignificant portion which are outright criminal/predatory.  I never had an significant incident (again knock on wood) at that property (which had a visible security system,  other visible security features, etc) all the newer townhouses in the area are constantly seeing package thefts and car prowls.   A recent car break in incident caught on camera at my neighbors showed a guy prowling cars,  taking stuff from the car,  and going back into the RVs across the street.   The police would not do anything because the one part of the incident the cameras did not record was the guy breaking the window glass.  My neighbors were rightly furious about it.

Many of the new townhomes that have been completed in the last couple years in the neighborhood have already turned over - some more than once. There are lots of possible reasons for it but its virtually certain that the homeless/transient situation is a factor. Its something a lot of people are willing to put up with for a while for some of the other perks of the area, but eventually wears them (and me) down and they move on. If I had to spitball a number I'd say property values might be $50-$100k lower per housing unit (townhouses or older SFR's) as a result of the situation. In percentage terms thats 7%-12% roughly. The city is now trying to site a drug/alcohol rehab facility in the neighborhood. A lot of people are very concerned about this for the same reasons as OP - however the argument goes both ways - in this case most of the people it is likely to serve are already in the area in tents and RVs. Its probably less likely to be come a "destination".

Seattle has been starting to gradually change tactics away from the most extreme permissive policies it was trying - basically let homeless do whatever they want whereever they want and try to tax amazon to continue acommodating it) though it mostly isn't publicly announced.  For example they have been starting to barricade areas used repeatedly as RV camps and destroy the most unsanitary/unsafe impounded RVs instead of selling them at auction to end up on the street again,  and are doing a better job (still inadequate,  but better) of removing encampments before they get too large or out of control.   They are also boosting the shelter system and trying to offer more drug/mental health treatment services among many other strategies to try and combat many different causes of the problem.   They still need to get out of the way of the police and let them do their jobs though.   Homelessness,  addiction and mental illness should not be criminal,  but criminal acts should be treated as such regardless of their root cause.  If somebody who is an expert in criminal behavior decides the root cause is the above and intervention/treatment will offer better result than jail that's awesome.   

Most of the chronically homeless on the streets around here - despite rhetoric - aren't people who have been forced out of their long term homes/apartments by rising rents - they are drug addicted or mentally ill people who cannot hold a job, a criminal component, and some that prefer the lifestyle.   One of Seattle's policies is that when a homeless camp is cleaned up,  all identified residents must be offered shelter and other services.  Its regularly reported that a small fraction (often 1 or 2 people out of a camp of dozens) actually accept those services.   People in above situation may not have the capacity or judgment to make the best decision for themselves,  so relying on a voluntary policy for getting people treatment they need means in the end fewer get it,   and they are probably worse off by the time they accept it.      

I guess I would say if the property is in a very popular/desirable part of town with a lot services/entertainment then even if there is homeless services nearby that increase that activity in the area you will do OK,  but you will constantly be dealing with some of the side effect (more trash, low level property crime, occasional trespassers, etc).   If Austin doesn't go full left-wing-permissive-seattle-style and ensures those services have conditions and boundaries, so that they don't get the "Freeattle" reputation then the shelter won't draw an outsized proportion of people from all over who just want handouts,  instead it will be more likely to draw people from Austin actually looking to turn things around.   Those people are much less likely to be bad neighbors.  

@Gus Joseph I'm aware of the shelter you are referring to. From my experience and discussion with other locals, when they placed the downtown shelter, it had localized more of the homeless population in that specific area. Maybe the same amount of people were present in town but were now more noticeable. Though Austin has a very low violent crime rate, unfortunately it is reportedly high in property crimes. I would imaging having property in close proximity would lower it's value. You can probably get it for a low price then, but I would worry more about the long term value of the property if you hold it or resale as it would still be an unattractive option for people shopping for homes. Otherwise, I can't imaging the rest of the market suffering dramatically because Austin is still growing. 

@Gus Joseph There’s a homeless shelter in my town that is surrounded by million dollar homes. I’ve known several people that have owned homes near it (as primary residences) and I’ve watched that immediate market closely over the years. My friends all loved their homes when they first moved in, but moved after just a year or two because it didn’t take long to get extremely tired of issues caused by people coming and going to the shelter, such as extremely wasted people who get kicked out of the shelter and end up roaming the neighborhood looking for someplace to sleep, passing out in people’s yards, camping on the corner or in parks and pooping or fornicating in the bushes, harassing people walking in the park with their kids, begging on the corner, fighting with each other, etc.... just near-constant shenanigans related to the people from the shelter. The shelter-dwellers typically don’t have cars or jobs so they are around all the time walking everywhere, making them more a more prevalent presence in the neighborhood than a typical resident would be. The value of the homes in that area is still high, and it’s actually a very hot micro-market. But I see the same homes there coming up for sale all the time. So I’d say that the shelter does affect the value of surrounding properties, although only slightly because that area is still appreciating like crazy along with the rest of Boulder (similar market to Austin). The underlying macro-economics of the area (increased demand from good jobs and population growth, quality of schools, public transportation, climate, etc.), will determine the appreciation rate of the property, and the immediate area around the shelter may remain strong as long as the overall market is strong, just not quite as strong as other nearby areas perhaps. However I would say the potential slight negative effect on value isn’t the main issue here, but rather the ancillary headache-factor related to the shelter such as property crime, safety etc. that contributes to the overall character and desirability of the neighborhood, and leads to increased turnover of those properties. If you’re looking at a buy and hold rental, the shelter will certainly increase your turnover rate because it won’t take tenants long to grow tired of the drama that the shelter inhabitants bring to the neighborhood. Churn, in my experience, is the top profit killer. You’ll also probably end up dealing with more complaints and tenant issues due to the proximity to the shelter. The homes I’ve noticed turning over the most are the ones along the main walking routes to and from the shelter, where those frequenting the shelter are walking by all the time and loitering along (there’s one house in particular that is right across from the bus stop which seems to be for sale all the time despite being a very nice home). If the property is on a side road a few blocks away and not on a main walking route to the shelter, it won’t be as effected.