How Do Natural Disasters Tend to Affect Home Sales?
October 30, 2012
Natural disasters or man-made catastrophes can having a “chilling” effect on the real estate market, Inman News reports.
The impact of “Superstorm Sandy” on the real estate market is still unknown as it continues to pound into the Northeast, threatening an estimated 284,000 homes and possibly $87 billion in damages, CoreLogic estimates.
But “the effect that natural disasters can have on housing markets are certainly localized, but in those areas, they can have a chilling and immediate influence on home buyer confidence and stall mortgage operations, hurting home sales and having even more dire consequences when combined with other economic factors,” Brad Inman with Inman News reports.
For example, Hurricane Katrina, which killed more than 1,800 people when it struck the Gulf Coast in 2005, displaced about 750,000 households. Four years following the disaster, homes sold in New Orleans were found to have dropped 23 percent from May 2008 to May 2009.
The San Francisco Bay Area saw its housing market brought to practically a halt following a 1989 earthquake. “Mortgage operations came to a standstill as lenders were unable to process loans and fearful buyers pulled out of deals,” Inman News reports. “Mid-term, consumer confidence in California real estate was chilled by the looming long-term effect that the threat of earthquakes would have on California real estate.”
Source: “Natural Disasters and Real Estate,” Inman News (Oct. 29, 2012)
Updated: June 22, 2018