Is Zika Impacting Home Prices Down South?

Posted by Patrick Barnard on September 20, 2016 No Comments
Categories : Residential Mortgage

As everyone in the real estate and mortgage industries knows, a major reason first-time home buyers are often in the market is because they are thinking about starting a family.

At the same time, the Zika virus, which is more prevalent in the Southern states, presents a very serious health concern for expecting parents.

So, just how much is the presence of Zika impacting home prices in the states where it is most prevalent?

According to a new report from Summit Valuations, a full-service valuation company, the Zika virus may already be impacting Florida real estate prices – but it’s still too soon to say for sure.

“In July 2016, Zika virus fears hit south Florida, specifically the Wynwood neighborhood of Miami and Miami Beach,” said Mark Melikian, chief valuation officer for Summit, in a statement. “We wanted to see if we could find any evidence in the most recent real estate data to indicate what effect, if any, this scare was having on real estate prices. Like other environmental events that we studied in our analysis, we expect the virus to have an impact on prices in markets in which it is found. However, it’s too early to see any change other than expected seasonal changes in the data we studied.”

According to the firm’s Residential Real Estate Market Overview, the South had the highest number of existing-home sales in July – out of all of the regions tracked in the report.

During that same month, the supply of housing, the seasonally adjusted annual number of homes sold, the unemployment rate and mortgage rates all decreased, on a year-over-year basis, according to the report. The median sales price and the pending home sales index both increased.

The West experienced the largest percentage increase in the number of seasonally adjusted existing-home sales, while the Midwest had the largest percentage gain in median sales price, month over month.

As for Zika’s ultimate impact, Melikian said, “While it’s too early to tell what impact Zika will have in Florida, we can take lessons from previous environmental events, such as the 1979 nuclear power plant accident at Three Mile Island and the 1982 volcanic eruption fear in Mammoth Lakes, Calif. Our analysis indicates that residential real estate prices may decline in the impacted markets but are then likely to level or recover over an extended period of time. We will continue to monitor this situation.”

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