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Environmental Risks Impact Rate of Appreciation, and Climate Change Expands What Areas Face Environmental Risks

The Real Deal

Everything Real Estate in the San Fernando Valley
Wednesday December 16, 2020
Environmental Risks Impact Rate of Appreciation, and Climate Change Expands What Areas Face Environmental Risks

Despite COVID, the housing market has been growing at an astonishing rate; proving many early-COVID predictions wrong. However, it is important to note that not all homes appreciate at the same rate. The Chernov Team specializes in Studio City, Sherman Oaks, Encino, and Tarzana; these homes are not “fire-prone” or “flood prone” areas as of right now, but as the climate changes, it is possible that they will be. This article will briefly discuss the appreciation of homes in “fire-prone,” and other disaster-prone areas.

In 2020, homes that were not in “fire prone” areas appreciated by 5.2%, whereas homes that were in designated “fire prone” zones appreciated by 2.9%. Between 2014 and 2019, non- “fire zone” homes appreciated 35%, while “fire-prone” zone homes appreciated by 32%.

We see a similar pattern in “flood-prone” coastal counties. Between 2014 and 2019, homes located in areas with a “severe” risk of flooding (78 counties that had a hurricane-related disaster) appreciated by 25%, whereas homes outside of those zones increased by 30%. While this is not a particularly apt comparison, since it’s unlikely we will see hurricanes and Katrina-esque flooding in the San Fernando Valley, it is still useful in understanding that environmental risks negatively impact the rate of appreciation for homes in those areas.

At the Chernov Team we understand that knowledge is power, and knowledge of how the market behaves in dangerous environments, regardless of how many years it may take for that to become the case, is powerful knowledge indeed. It is important to understand both the short-term factors that impact the housing market, as well as the long-term factors. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.

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