The second-most disaster-laden season on record, so far 2017 has been a stunner with 9 separate weather, climate and flood disasters ranging from western wildfires to eastern hurricanes. How badly does such climate craziness actually affect area real estate selling trends?
The Effect of Natural Disasters on Local Markets Can Be Chilling and Immediate
Though localized, disaster effects put a freeze on both buyer confidence and mortgage operations, hurting home sales. When combined with other economic issues, this can result in long-term consequences.
How Have Past Disasters Affected Sales?
• The 1989 San Francisco Bay area earthquakes brought the area housing market to an abrupt halt as lenders were unable to process loans, and scared homebuyers reneged on deals. The ripple effect of the quakes loomed long thereafter.
• The 1993 Mississippi River flood damaged over 100,000 homes. The costliest flood of the 20th century, post-flood all property prices in municipalities on the rivers fell 6-10%.
• The mass evacuation and relocation of New Orleans residents for Hurricane Katrina in 2005 displaced 750,000 households. Four years post-disaster, homes were found to have dropped 23% in value.
• The actual impact of the 2012 ‘Superstorm Sandy’ remains unknown. Four years later, area markets continue to recover.
• The 2017 wildfires in Sevier County, Tennessee saw the area’s affordable housing market especially hard hit. The aftermath left working-class residents scrambling for remaining housing within their means – and more well-off residents displaced during lengthy rebuilds.
In it for the Long Haul
Of those localized areas experiencing a decline, real estate selling trends point to a bright side. The negative market effects of natural disasters won’t last forever. This is especially true of areas in proximity to good weather and good jobs, which weigh more heavily on buyers.
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