Rising sea levels are not stopping buyers from getting hold of seaside homes.
As work flexibility gives consumers wider housing options, homes in high-risk flood-risk areas sold at a record 13.6% premium over those in low-risk areas in the first quarter of 2021, according to Redfin. That premium increased from 10.1% annually and from 7.2% two years ago. High-risk properties rose to an average sale price of $ 402,010 for the quarter versus $ 353,783 for their low-risk counterparts.
The sales volume of residential properties with flood risk also shot up by 18.6% annually in the first quarter of the year, almost doubling the annual growth rate of 9.6% for low-risk houses.
While climate change puts off nearly three-quarters of borrowers in their search, it isn't a deal breaker enough for buyers who want their dream home on the water.
"This may be because buyers are unaware that they are buying a home in a floodplain or simply do not see it as an imminent threat," Redfin senior economist Sheharyar Bokhari said in the report. “Locations with a high risk of flooding often have a large number of retirees, many of whom do not see climate change as a threat that they will have to worry about for the rest of their lives. Florida is an example. "
Despite growing populations in coastal regions, the risks associated with real estate in these areas continue to increase. Approximately 8 million households on the Atlantic and Gulf coasts are currently at risk of storm surge, adding up to an estimated $ 1.9 trillion in water damage reconstruction costs, according to a recently released CoreLogic report. Those numbers rose from $ 7.4 million to $ 1.8 trillion in 2020.
Due to a larger number of potential buyers, more low-risk homes were sold above the offer price in the opening quarter of 2021. A share of 47.2% achieved more than the list prices compared to 37.4% of the high-risk properties. That relationship has lasted at least since the first quarter of 2013, though the gap between the two varied over time.