Destructive to investment
It is already a given that a flooded home is less appealing to home buyers given the unfortunate flooding that has inundated some parts of it, the damage that was incurred due to flooding, and the location of the home.
There however is more to the lower market value that it gets after the flooding, as the chances of molds, and a weaker structure becomes imminent to the eyes of a home buyer. Read more here
Chron.com has shared an article on home values following a flooding event. In their write-up, their focus was the homes badly hit by Hurricane Harvey.
“If the flood damage from Hurricane Harvey were not enough, homes that took in water for the first time will see their valuations drop, perhaps by as much as 60 percent. Exactly how much appraised value a newly flooded home will lose depends on its location and how much damage was done. But four separate academic studies following past flood events show that values typically drop by at least 15 percent. Texas law, by the way, requires a seller to disclose whether a home has ever been flooded.”
Read more here.
ScienceDaily has shared a research work that indicated a lower property value for areas within the flood zone. In the study that they published, they mentioned that proximity to an area classified as a flood zone lowers property value.
“The findings indicate that the price of a residential property located within a floodplain is significantly lower than an otherwise similar house located outside the flood zone. On average, location within a floodplain lowers estimated sales value $11, 600, representing a 7.3 percent reduction of the average house sales price.”
Download the published research here.
Temporary drop in prices
Forbes.com meanwhile published an article discussing home values following a flood occurrence. While they mentioned that home values may indeed be negatively affected by a flooding incident, they say that the lower property valuation is just temporary.
“Reports show that home sales happen less frequent and at a lower cost immediately after a storm. Experts have reported that pending home sales drop by about 50% in Florida housing markets. However, as the study at Colorado State University found, this negative impact is short-lived. In Texas, after two months from the flooding left by Hurricane Harvey, 31% of residential neighborhoods saw an increase in median home prices.”
Check out the continuation of the article here.
Flood damage can indeed affect the real estate value of a property whether on a short term or a long term basis.