While no one wants a life in a high-risk area, buyers generally ignore philosophical dangers and continue to pay a premium for properties in fire or flood zones.
SEATTLE – Homebuyers paid a premium for high-fire-risk and high-flood-risk homes during the pandemic, according to research from Redfin. Even as climate-change gains a higher profile, more people have moved into climate-risky areas than out of them in recent years.
The 50 U.S. counties with the largest percentage of homes facing high fire and flood risk saw their populations increase by an average of 3% and 1.9%, respectively, from 2016 through 2020, due to positive net migration.
In addition, second-home purchases with high flood, storm and/or heat risk surged roughly 40% over the past two years.
Part of the reason may be perceptions if climate change is viewed as a global problem that will exist in any location. The survey found that 63% of people who moved during the pandemic believed climate change is, or will be, an issue in the place where they now live.
“From devastating floods in Kentucky and Missouri to deadly fires in California and brutal heat waves across the U.S., it’s clear that natural disasters are intensifying. Still, people are moving into risky areas,” said Redfin Chief Economist Daryl Fairweather. “When people decide where to live, they consider a whole host of things ahead of climate change, which has potential implications on their safety, home stability and finances.”
Homes in high-risk vs. low-risk areas
The median sale price of U.S. homes with high fire risk was $550,500 in April 2022, compared with $431,300 for homes with low fire risk. In other words, the typical home with high fire risk sold for $119,200 (27.6%) more than the typical home with low fire risk – the largest premium in dollar terms since at least 2017.
Places like suburbia – which faces a greater first risk than downtown city locations – saw a surge in homebuyer demand over the last two years, causing prices to jump.
Similarly, the median sale price of homes with high flood risk was $402,010 in the first quarter of 2021, compared with $353,783 for homes with low flood risk. That means high-risk homes sold for a record 13.6% premium – up from a premium of 10.1% in the first quarter of 2020.
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Author: kerrys