Improving Albuquerque Crime Rate Bodes Well for Home Equity

By Richard Barrington
Local Lender Columnist
Aug 6, 2008
Quality of life can be a subjective concept, dependent on many factors: weather, economy, commuting times, etc. However, just about everyone would agree that safety is one of the most fundamental components of quality of life. Thus, Albuquerque's improving crime rate signals an increase in the area's quality of life--something that should help support local housing values.

Making Progress Against Crime

In 2007, Albuquerque experienced 3,000 fewer crimes than it did at the start of the decade (calendar year 2000). This represents a 1.9% drop in total crimes since the start of the decade, and a 4.4% drop from the peak year for crime, which was 2001.

In the context of relating crime to property values, it is significant that crime prevention has made especially great strides in certain categories related to home and property. Between 2000 and 2007, arson in the Albuquerque area dropped by 42.0%. Burglary fell by 21.8% and trespassing declined by 7.9%.

All of the above represent meaningful improvement in the protection of property for Albuquerque area home owners. This improvement is necessary, because the area still faces some challenges when it comes to crime. According to statistics from a 2003 FBI study, Albuquerque exceeded the per capita national average in all four major categories of violent crime (murder, forcible rape, robbery, and aggravated assault). Albuquerque also exceeded the per capita national average in three out of four categories of property crime. Of some solace to home owners, Albuquerque's per capita arson rates are about half the national average.

It is always important to look at crime rates in the context of their trends--that is, are things getting worse or getting better? For Albuquerque, the overall trend since the start of the decade is improvement. There are some troubling exceptions in violent crimes such as murder and rape, but the overall reduction in crime indicates that the area generally is a safer place to live than it was in 2000.

Home Improvement Loans and the Virtuous Cycle

Naturally, the safety of family and property relates directly the value of real estate in an area, and over time safety and property value can feed on each other. There are unfortunate examples of a vicious cycle--when crime discourages investment in an area, it becomes rundown and poorer, which further raises the crime rate. In contrast, areas like Albuquerque which are seeing improvements in crime prevention can experience a virtuous cycle and may see more new home buyers in the community.

In this virtuous cycle, improving crime rates support home equity values. This in turn makes it easier for home owners to get home improvement loans, via home equity loans or home equity lines of credit (HELOCs). These home equity loans and HELOCs represent an investment in the prosperity of a community, and that generally leads to less crime.

The challenge then for Albuquerque is to continue its progress against crime, to set this kind of virtuous circle in motion and gain the interest of new home buyers.

Sources:
CityRating.com

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.