Nature Is Impacting the Housing Market, But Buyers Aren’t Seeing It
Would you buy a home if you knew that it was in a flood zone, an area that’s prone to devastating earthquakes, or right in the path of the annual hurricane? Probably not. But, if you were interested in buying a home in one of these areas, you’d at least expect to pay an extremely low price for it. However, according to recent studies, most Americans don’t seem to care about the role nature may play on the future of their massive investment. This lack of knowledge or blatant disregard for the climate could actually be one of the leading factors on the potential crash of the housing market.
Natural Disasters Only Affect Sales Short-Term
It seems that only when a disaster happens do people finally take Mother Nature seriously, especially when it comes to buying a home. According to a study done by Realtor.com, as soon as a disaster hits, sales were immediately affected. For instance, after the wildfires in Northern California, sales were 18% lower than expected, while in the aftermath of Hurricane Irma, sales were 32% lower than expected. Though this seems obvious to most people, these horrible disasters only impacted sales for a very short period of time. It didn’t take long for people to forget about the destruction, for prices to go back up to normal and for the idea that something may happen again to be easily dismissed.
People Still Want to Buy in Attractive Locations
So, why does the housing market bounce back so quickly after a disaster? Well, it’s because most Americans still fall in love with the idea of living somewhere exotic — say, on the Gulf Coast or in the mountains of California. Unfortunately, some of the most desirable areas are those that get hit the hardest, and that’s no coincidence. Climate change has drastically affected these areas, causing forest fires as temperatures get higher and detrimental floods as sea levels rise. Yet, according to a poll by Gallup, more than 30% of Americans still don’t believe that climate change is a “thing.” So, why on earth, then, would they care about the possibility that their home may be destroyed by a hurricane in the next couple of years, if they can live the dream now?
American Culture Plays a Role
Despite the fact that climate change IS a real concern, it’s clear that this American idea of wanting things and wanting them as soon as possible is part of the reason people don’t seem to mind if their home eventually gets destroyed by a flood. When the new iPhone comes out, the next year’s car model hits the market, or a new savvy gadget blows up the Internet, most Americans won’t waste any time spending their next paycheck or maxing out their credit card to get what they want. In general, we are a consumerist society and this translates to nearly every purchase we make, including owning a home. In the eyes of many Americans, they envision what their life would be like waking up to a view of the water every morning. But, they don’t seem to think about what would happen if that water were to come rushing through their front door in a blink of an eye.
American Beliefs, the Government, and the Housing Market
There’s no doubt that natural disasters are destroying beautiful homes and lives more than ever before. But people remain skeptical, many believing the idea that “It won’t happen to me!” At the same time, the one system that people may be easily convinced by—the government—isn’t doing its job to help people understand the risk they are taking when buying a home in such an area. FEMA is required to release and update maps of floodplains to the public, so that people know what they are getting themselves into.
But this information isn’t as accessible as one may think, and if it were, the transparency would allow for the appropriate pricing of homes. Unfortunately, that pricing comes much too late if at all, and those who have spent an exorbitant amount of money to live in a nice area near the water have just watched the value of their home plummet. Likewise, when people continue to remain ignorant about the effect of climate change on the housing market, they will have no problem buying a home that’s extremely overpriced, because “What a person doesn’t know won’t hurt them.” The current administration also isn’t helping, proposing to cut FEMA’s budget by hefty a sum—a sum that would help make this information more available to the general public, essentially keeping the housing market stable. But, all these factors considered, there’s absolutely no arguing that the housing markets in these areas are in serious danger.
The Bottom Line
While it may seem like you’re living out your life’s dream by buying that home you’ve always wanted, you may need to reconsider. Climate change was not as much of an issue years ago, and therefore, people felt that if a flood hit their home only once over their 30-year mortgage, then the dream would be worth it. But, these days, buying a home in a risky area can have more unpleasant surprises than pleasant ones. If the American population doesn’t want to see the market crash, then brokers need to do their job of being as open with their clients as possible. After all, you can benefit from the sale now, but, if the market crashes, you may be out of work at some point, too.