Homes With High Flood Risk Are Selling for Nearly $50,000 More Than Low-Risk Homes as Pandemic Buyers Chase Waterfront Properties

SEATTLE, June 9, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — 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, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. That means 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.

Since 2013, homes with high flood risk have sold for about 7% more than homes with low flood risk on average, likely because many of them are luxury waterfront properties. That premium surged during the coronavirus pandemic, when many wealthy homebuyers started eyeing oceanfront or lakefront houses outside of major cities.

"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."

Redfin and other real estate websites have started sharing property-level flood risk data online to help house hunters determine if the homes they're interested in are located in flood plains and whether they should purchase flood insurance.

Places that are prone to flooding are also seeing stronger growth in home sales. Sales of high-flood-risk homes rose 18.6% year over year in the first quarter—about double the 9.6% gain in sales of low-flood-risk homes.

In Jacksonville, FL, homebuyers often inquire about flood risk, but it virtually never causes them to back out, said local Redfin real estate agent Heather Kruayai. Jacksonville, which is on the Atlantic Ocean and has two waterways running through it, has about 43,000 properties facing high flood risk, according to First Street Foundation's Flood Factor.

"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."

While home prices and sales growth are both higher for high-risk homes, homes with low flood risk are more likely to fetch more than their owners ask for. In the first quarter, 47.2% of low-flood-risk homes went for more than they were listed for, compared with 37.4% of high-flood-risk homes. That 9.8-percentage-point gap is the largest on record. Redfin's records date back to 2013.

Properties with low flood risk typically cost less than properties with high flood risk because they're less likely to be on the beach with waterfront views, Bokhari explained. Because low-risk properties are more affordable, they face more competition, which means buyers are more likely to bid up the prices.

To read the full report, including additional charts and data, please visit: 
https://www.redfin.com/news/flood-risk-home-price-premium-Q1-2021 

About Redfin 

Redfin (www.redfin.com) is a technology-powered real estate broker, instant home-buyer (iBuyer), lender, title insurer, and renovations company. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 95 markets across the U.S. and Canada and employ over 4,100 people. 

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email [email protected]. To view Redfin's press center, click here.

SOURCE Redfin