How Natural Disasters Are Influencing American Moving Decisions

A significant 27% of Americans report that recent natural disasters have made them want to move or changed their desired relocation destination, according to an October 2020 Redfin survey. This data highlights a growing consideration for homebuyers and sellers: climate risk. While half of respondents felt no impact, and 23% liked their location more, the findings suggest that environmental factors are becoming a tangible element in real estate decisions, with measurable effects on property values in high-risk areas.

How Do Natural Disasters Impact the Desire to Move?

The survey of over 3,000 U.S. residents revealed a clear divide in public sentiment. More than a quarter of Americans indicated that events like wildfires, floods, and storms have directly influenced their living preferences. This reaction is not uniform across the country. The Northeast had the highest share of residents rethinking their location (33%), followed by the South (28%), the West (27%), and the Midwest (23%). This geographic variation underscores that the immediate experience of a disaster plays a critical role in shaping moving intentions.

Is There a Financial Impact on Housing Markets?

The influence of natural disasters extends beyond sentiment to direct financial consequences. An October 2020 Redfin analysis found that homes in high-wildfire-risk zip codes sold for an average of 3.9% less than those in low-risk areas. This price difference, often called a "risk discount," has grown significantly from a 2.5% premium in 2012. This trend indicates that the market is beginning to price in the long-term risks associated with climate-related events, a crucial factor for both buyers seeking value and sellers setting realistic price expectations.

What Role Does Insurance Play in This Equation?

The availability and cost of homeowners insurance are emerging as critical factors. As noted by Redfin's chief economist, climate change may lead insurance companies to reassess coverage in catastrophe-prone areas. If insurers pull out of high-risk markets or dramatically increase premiums, it could further depress property values and complicate mortgage approvals. For potential buyers, verifying the availability and cost of adequate insurance is an essential due diligence step before purchasing in areas with a history of wildfires, floods, or hurricanes.

Despite the growing trend of climate-related relocation, personal resilience is also a factor. Some individuals, after facing a disaster, develop a stronger attachment to their community. As one real estate agent in Irvine, California, noted, even after being forced to evacuate, many of her clients chose to proceed with their home purchases, indicating a belief that normalcy would return.

Based on our experience assessment, here is practical advice for navigating real estate decisions in the context of natural disasters:

• For Buyers: Research the specific natural disaster risks for any area you are considering. Look beyond listing details to consult FEMA flood maps and state wildfire risk resources.
• For Sellers: Understand that buyers are increasingly aware of climate risks. Be prepared to discuss mitigation features your property may have and price your home competitively based on current market comparisons in your zip code.
• For Everyone: Factor in the long-term cost of insurance. A lower purchase price may be offset by significantly higher annual insurance premiums, affecting the overall affordability of a home.