More People Are Moving In Rather Than Out Of Places Up Against Intense Drought

About three-quarters of metropolitan areas where more than half of homes experienced intense drought in August have seen more people move in than out in recent months, according to a new report from Redfin, a technology-powered real estate brokerage.

In 34 of the 129 metros (26%) Redfin analyzed, more than 50% of homes experienced intense drought in mid-August. Twenty-five of those 34 metros (74%) saw net inflows in the second quarter. A net inflow means more Redfin.com users looked to move in than leave.

Only 23 of the 99 metros (23%) that Redfin has 2021 data for had more than 50% of homes experiencing intense drought in mid-August 2021. Of those 23 metros, 16—or 70%—saw net inflows in the second quarter of 2021.

“Many people take climate risk into consideration when deciding where to live, but other factors, like affordability, often take precedence given that rent costs are rising and monthly mortgage payments for home buyers are up nearly 40% from a year ago,” said Redfin economist Sebastian Sandoval-Olascoaga. “Drought may also not be scaring people off to the same extent as fires or flooding, which can physically decimate homes. Still, homeowners and buyers should be aware that drought danger could ultimately dent their home’s value if a lack of water forces residents to leave en masse.”

An estimated $17 trillion worth of homes (roughly 25 million properties) in the metros Redfin analyzed experienced intense drought in mid-August 2022, up 42% from $12 trillion (14 million properties) a year earlier. The increase was partly fueled by the surge in home prices over the past year, but is also related to where drought-prone properties are located. Los Angeles, San Jose and New York—three of the most expensive housing markets in the country—were among the metros with the largest number of homes facing intense drought in mid-August. Dallas, San Antonio and Sacramento—Sun Belt metros that have seen home values soar due to an influx of new resident—were also in the top 10.

Much of drought-prone America is in the Sun Belt, which has ballooned in popularity in recent years as people have been priced out of expensive coastal cities. From 2016 through 2020, more people moved into than out of areas facing high risk from not only drought, but heat, fire and flood as well. The 50 counties with the largest share of homes facing high drought risk saw their populations increase by an average of 3.5% during that period due to positive net migration. This trend intensified during the pandemic as remote work made it more feasible to relocate to relatively affordable areas.

In Las Vegas, Sacramento and San Antonio, the influx of new residents coincides with intense drought

There were 13 metros where 100% of homes experienced severe, extreme or exceptional drought in mid-August: Las Vegas; Bakersfield, California; Austin, Texas; Killeen, Texas; Visalia, California; San Antonio; Dallas; Reno, Nevada, Chico, California; Salt Lake City; Sacramento, California; Fresno, California; and Salinas, California. All but two of those metros—Visalia and Salt Lake City—saw more people look to move in than out in the second quarter.

Sacramento had the biggest net inflow among those 14 metros, with 9,640 more Redfin.com users looking to move in than leave in the second quarter. It was followed by Las Vegas, (8,597), San Antonio (5,335), Dallas (4,964) and Bakersfield (2,576).

“Out-of-towners are still flocking to Vegas because they want lower taxes, cheaper groceries and gas, more affordable homes and less traffic. Moving to a lower-tax state is a good way to trim your spending at a time when virtually everything is becoming more expensive,” said local Redfin real estate agent Lori Garlick. “Home buyers are expressing concerns about drought, especially now that the shrinking of Lake Mead is all over the news, but drought risk isn’t a dealbreaker for most of my clients. I did have one buyer back out of moving to Vegas because they were worried there wouldn’t be any water in a few years, but they ended up moving to Arizona, which is also endangered by drought.”

Nevada last year passed a law calling for the removal of “nonfunctional” grass by the end of 2026 in an effort to conserve water. And starting September 1, Las Vegas homeowners won’t be able to have swimming pools larger than 600 square feet—a rule that could affect high-end home buyers with ambitions for large pools.

“It will be interesting to see whether new water restrictions will affect migration to Las Vegas,” said Garlick. “Say you’re a green thumb from California who’s used to trees and lawns, and you’re wavering between drought-prone Las Vegas and drought-prone Colorado. The rules limiting vegetation in Vegas might cause you to opt for Colorado.”

An influx of migration is compounding climate dangers in some areas. In Utah, for example, population growth is one factor causing the Great Salt Lake to dry up. If it continues to recede, toxic chemicals in the lake bed could get picked up in wind storms and poison residents. The Salt Lake City metro experienced a net outflow in the second quarter, but surrounding areas, including Wasatch County, have seen their populations increase in recent years.

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