Many people who got motivated by the pandemic to buy a second house, now own a property with a high risk of a natural disaster, a study shows. The pandemic had created both the need for vacation homes and the opportunity to buy them at low rates. However, it seems like the buyers weren’t interested in the riskiness of the area as much as they were in the proximity to the beach.
Vacation home purchases were fueled more than anything by the coronavirus effect on the market. Interest rates going under 3%, rising home equity to borrow against, and of course the fact that everyone wanted to avoid the crowd made vacation homes an attractive asset.
People were eager to buy even when they knew there was a risk of some kind of natural disaster, but some of them didn’t even know about risks. This is creating a problem for the future, not only that those properties could be in danger, but their value is also questionable as climate change gets more and more a part of buyers’ worries.
Redfin’s study analyzed and compared two years since the pandemic and two years right before. The overall interest in vacation homes rose by 37%, and some risks are more “popular” than others.
It seems like a high flood risk wasn’t such a big deal-breaker for pandemic buyers, as there are 45% more sales of that kind of property in 2020-2021 than two years prior. Purchases of homes with storm and heat risks rose around 40% during the pandemic.
Even fire hazards didn’t make the buyers back out of the sale, as they bought 35.7% more fire hazardous properties during 2020-2021 than before the pandemic. Buyers are facing the least risk with drought, but there were still 29.6% more purchased houses in drought-prone areas than in the two years leading up to the pandemic.
Most homes bought during the pandemic will face heat and storm risks, with over 90% of the homes located in the high-heat zone and almost 80% in the high-storm zone.
It is obvious that natural-disaster risks have little to no part in the decision-making process when it comes to second home buyers. That is mostly because they have a place to live outside the hazardous area. However, the risk of these properties isn’t just about the natural disaster hitting, it is in the decreased value.
People are frequently talking about climate change and this conversation is infiltrating the housing market. Those who are buying up often consider the weather conditions when searching for a residential property. Vacation homes are still left out of this trend, but soon people will look into it more, and the places with natural disaster risks will lose value.
The most popular risky areas for vacation property sales were Miami, Tampa, and Phoenix, areas with high storm and heat risks. The second home market in these areas has started to dampen, with sales rates falling to below pre-pandemic levels.
If the risks of natural disasters didn’t stop people from buying properties, high rates and new taxes for vacation homes apparently will.
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