Storms and wildfires are posing a large risk to real estate, so what should homeowners and buyers consider about the impact of these hazards as well extreme heat, drought, and floods on their homes and its value over the long run?
As for wildfires, a Redfin study found that homes in high-wildfire risk zip codes in California, Oregon, and Washington sold for 3.9% less than properties in low-risk ZIP codes during 2020. Also, according to Redfin, nearly half of the respondents who plan to move in the next year said extreme temperatures and/or the increasing frequency or intensity of natural disasters played a part in their decision to relocate. Another Redfin survey found that one in five Americans (21%) believe the increasing frequency or intensity of natural disasters, extreme temperatures, and/or rising sea levels are hurting home values in their area.
While homebuyers and sellers are aware of the risks posed by climate change and are thinking about how these risks may affect their homes, these ideas haven’t yet translated into major changes in buying habits or home prices. In fact, some of America’s disaster-prone areas are actually becoming more populous as new residents move in, which is keeping property rates steady, if not increasing them. This influx of new residents may be due to the relative affordability of homes located in these higher-risk areas.
“Homebuyers are concerned about climate change, but it’s not their top concern,” said Redfin Chief Economist Daryl Fairweather. “People have to make compromises when buying a home in order to stay within budget. Since there is already a shortage of affordable housing, many homebuyers have no other choice but to accept living in a place where climate disasters are becoming more prevalent.”