As natural disasters become more frequent and severe, their impact on real estate markets and consumer decision-making becomes increasingly apparent. Freddie Mac’s recent report, U.S. Economic, Housing, and Mortgage Market Outlook – September 2024 | Spotlight: Natural Disaster Threat, offers essential insights for real estate agents to understand better how the rising threat of natural disasters influences the housing market. Here are the three key findings from the report that can help agents guide their clients in navigating the evolving real estate landscape.
1. Natural Disasters Are Shaping Location Choices, Especially for Renters
With natural disasters on the rise, more households are considering relocating to safer areas. According to the report, in 2023, one in seven U.S. households investigated new places to live due to concerns about natural disaster threats. This shift is particularly noticeable among renters, who have more flexibility than homeowners regarding relocation. Real estate agents should stay informed about regions prone to natural disasters and be prepared to help clients assess the risks and benefits of moving to or from these areas. Highlighting safer locations can become valuable, especially for renters seeking long-term stability.
2. Property Improvements to Reduce Risk Are Increasing
Another significant trend in the report is that homeowners increasingly invest in property improvements to protect their homes from natural disasters. In 2023, 23.3% of homeowners made such improvements, up from 17.6% in 2022. These enhancements include reinforcing roofs, installing storm-resistant windows, or elevating properties in flood-prone areas. Real estate agents can be crucial in advising clients on how these upgrades can increase a property’s value and appeal while providing additional safety during extreme weather events. For clients already impacted by natural disasters, these improvements can be an essential selling point for buyers and sellers.
3. Few Households Are Purchasing Additional Insurance
Despite the growing risk of natural disasters, only 5% of households purchased additional insurance in 2023, a figure unchanged from the previous year. This statistic suggests that many homeowners and renters may be underinsured, especially when protecting against damage from floods, hurricanes, or wildfires. Agents should educate clients on the importance of securing adequate insurance coverage, mainly if they live in high-risk areas. It’s also worth noting that higher-income households and younger, minority homeowners were more likely to purchase additional insurance. For real estate agents, emphasizing the long-term financial benefits of comprehensive insurance can help clients better protect their investments.
The Role of Real Estate Agents in the Age of Natural Disasters
Natural disaster risks are becoming an increasingly important consideration for homebuyers and sellers alike. Real estate agents should proactively guide clients through the various options available for safeguarding their homes, whether by helping them explore relocation to safer areas, advising on property improvements, or stressing the importance of proper insurance coverage. Understanding the socioeconomic and demographic factors that influence how households respond to natural disasters can also help agents tailor their advice to meet the specific needs of different clients.
By staying informed on natural disaster risks and households’ evolving responses, real estate agents can better serve their clients and help them make more informed, confident decisions in today’s market.
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