Natural disasters are impacting home values in high-risk areas at a time when home prices are soaring across the United States, according to a realtor.com analysis released Monday.
The value of homes in high-risk flood areas grew at 5 percentage points lower than homes in similar areas with less flood risk, while the values of homes in high risk fire areas increased at 3 percentage points lower.
In 78 flood-risk counties across the country, realtor.com found that homes with hurricane-related disaster declarations experienced a cumulative sales price per square foot growth of 25 percent, compared to 29 percent for homes with a moderate or major risk, and 30 percent for homes with a minimal or low risk.
Realtor.com also found that between 2014 and 2019, the prices of homes in California within a one-mile radius of historical fire perimeters increased by 32 percent, compared to 35 percent for other homes in the same county.
“As the impacts of climate change and worsening natural disasters become more well-known, it’s natural for home shoppers to take these factors into account when deciding the purchase price of a home, and tools that make information about these risks more available to buyers will help them make good choices,” said realtor.com Chief Economist, Danielle Hale. “When buying a home in a flood or fire-prone area, home shoppers should budget for the added costs of home insurance, mitigation practices and potential losses, which can add to the total cost of ownership for the home.”