According to a new report from Redfin, approximately 75% of U.S. metropolitan areas, where more than half of homes experienced intense drought in August, have seen more people move in than out in recent months. 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.
Only 23 of the 99 metros (23%), 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 Q2 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 homebuyers 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.”
Nearly 25 million properties, or an estimated $17 trillion worth in homes in the metros 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.
Much of these drought-prone areas can be found in the Sun Belt region, 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 U.S. 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.
There were 13 metros where all of homes experienced severe, extreme or exceptional drought in mid-August: Las Vegas, Bakersfield, CA, Austin, TX, Killeen, TX, Visalia, CA, San Antonio include:
- Reno, Nevada
- Chico, California
- Salt Lake City
- Sacramento, California
- Fresno, California
- Salinas, California
All but two of those metros—Visalia, California; and Salt Lake City—saw more people look to move in than out in Q2.
“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 Redfin Real Estate Agent Lori Garlick. “Homebuyers are expressing concerns about drought, especially now that the shrinking of Lake Mead is all over the news, but drought risk isn’t a deal-breaker 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 to help conserve water. And starting Sept. 1, Las Vegas homeowners won’t be able to have swimming pools larger than 600 square feet—a rule that could impact high-end homebuyers with ambitions for large pools.
“It will be interesting to see whether new water restrictions will affect migration to Las Vegas,” Garlick said. “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.”