The power of a tornado can inflict tremendous damage on residential property, but the impact is also felt by nearby homeowners, even when their property is unscathed.<\/p>\n
Undamaged homes in close proximity to those that were partially or fully destroyed incur up to a 39% decline in value, according to finance and real estate professor Jeffrey P. Cohen,<\/strong> associate economist Violeta A. Gutkowski, and research associate Jack Fuller. Their findings were released in a recent economic report by the Federal Reserve Bank of St. Louis, where Cohen is a Research Fellow.<\/p>\n \u201cWe were very surprised by this at first,\u2019\u2019 Cohen says. \u201cThis kind of natural-disaster-created destruction is concerning to potential homeowners. It isn\u2019t a minor concern, like a lawn that needs to be mowed. When they see pieces of a home piled up, they don\u2019t know when it will be fixed, if ever. People think, \u2018Do I want this to be my neighborhood?\u2019\u2019\u2019<\/p>\n Study Focused on Arkansas Neighborhood<\/strong><\/p>\n Cohen\u2019s work focused on a tornado in Little Rock, Arkansas, which struck the area on March 31, 2023. He and the team examined home sales in the area between January 2022 and August 2024 and found that homes within 250 meters (.16 miles) of tornado-damaged properties experienced an average decrease in price of 36%. If multiple properties were damaged in the immediate area, the undamaged home\u2019s value declined 39%.<\/p>\n The decrease in property value continued up to a half mile from the disaster area. Notably, the findings were similar regardless of the wealth of the area. Their research also indicates that values return to normal in about nine months after the tornado.<\/p>\n Study May Benefit Connecticut State Leadership<\/strong><\/p>\n The findings offer lessons to state leaders about the importance of accelerating recovery, Cohen says.<\/p>\n \u201cThe implication for state governments is to subsidize recovery efforts, if possible, to expedite regional recovery and bounce back,\u2019\u2019 he said.<\/p>\n Cohen says the tornado research may have implications for other natural disasters, but with some variation.<\/p>\n \u201cIf a neighbor\u2019s basement gets severely flooded and the damage is \u2018invisible\u2019 to other homeowners, it may not have the same relevance,\u2019\u2019 he says. \u201cEvents like wildfires and earthquakes would be similar to tornadoes, if there are piles of rubble that would make future homebuyers uncomfortable or limit their access to community services, such as parks and houses of worship.\u2019\u2019<\/p>\n Hurricane Erin a Reminder of Natural Disaster Risk in CT\u00a0<\/strong><\/p>\n St. Louis experienced a tornado in May that created significant damage. That was the impetus for the project, because Cohen and the other researchers wondered what information they could glean from the Little Rock tornado that would benefit St. Louis.<\/p>\n The work is perhaps timely here in New England, with Hurricane Erin swirling in the Atlantic, Cohen says. Although the powerful storm isn\u2019t expected to make landfall along the East Coast, the hurricane season is far from over.<\/p>\n \u201cIn Connecticut, if or when we get hit by a hurricane, it would be helpful to speed up recovery incentives, so it doesn\u2019t hurt additional property value,\u2019\u2019 he says.<\/p>\n Cohen is the Kinnard Scholar in Real Estate at UConn and a widely published researcher. He has previously studied the impact of the U.S. interstate highway system on land and housing values, the connection between transit-oriented development and real estate and the impact of airport noise on housing.<\/p>\n