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A Redfin report reveals that the median sale price of homes with high flood risk was $402,010 in the first quarter of 2021, compared with $353,783 for homes with low flood risk. High risk homes sold for a record 13.6% premium, up from a premium of 10.1% in the first quarter of 2020 and a premium of 7.2% in the first quarter of 2019.
"Americans are buying the beach houses they always dreamed of because they have the flexibility to work from wherever they want," said Redfin senior economist Sheharyar Bokhari. "While flood risk is intensifying in many parts of the country, it doesn't seem to be a deal breaker for a lot of homebuyers. This may be because buyers aren't aware they're purchasing a home in a flood plain or just don't view it as an immediate danger. Places with high flood risk are also often home to large concentrations of retirees, many of whom don't see climate change as a threat they need to worry about in their lifetime. Florida is one example."
Luxury waterfront properties have always been popular, selling for about 7% more than homes with low flood risk on average. Once the coronavirus pandemic hit, many wealthy homeowners decided to buy oceanfront or lakefront properties outside major cities.
Places that are prone to flooding are seeing more growth in home sales. In the first quarter, high-flood-risk homes rose 18.6% year over year, which is about double the 9.6% gain in sales of low-flood-risk homes.
Redfin real estate agent Heather Kruayai said in Jacksonville, FL, homebuyers often inquire about flood risk, but it never causes them to back out of a sale. According to First Street Foundation's Flood Factor, Jacksonville has about 43,000 properties facing high flood risk.
"If you buy a home on the water in Florida, flooding is just something that comes with the territory. Most buyers understand that," Kruayai said. "A lot of out-of-state buyers have been moving here during the pandemic and purchasing waterfront properties, but there are also locals who are looking for space to spread out because the city has become so congested. Even if you wanted to negotiate a lower price due to flood risk, you'd have a tough time because we're in such a hot seller's market."
To read the full report, including charts and data, click here.