What happens to home values if you live near a nuclear reactor? | Prism Money | Analysis & Opinion

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The ongoing nuclear crisis that followed the earthquake and tsunami in Japan has renewed fears about nuclear power plants across the globe. It has led to temporary shutdowns in some countries and in the U.S., a call for safety reviews of the 104 reactors at the 64 commercial nuclear facilities — some just outside major cities and population areas like New York, Boston and Orange County, California.

For some homeowners in and near towns that nuclear reactors call home, safety is just one concern. Those looking to sell might be in for a long wait for buyers along with a decline in sale prices and property values. Experts say buyers will carefully scrutinize how close their dream home might be to a nuclear plant.

Already, community message boards across the web are on fire with comments from prospective buyers reconsidering a purchase in or near a reactor town. “I’d be shocked if this didn’t have a temporary negative effect on selling prices,” said David Clark, professor of economics at Marquette University. Clark has conducted numerous studies on the impact of nuclear power plants and other negative external factors, like crime and other perceived hazards, on home values.

Just how temporary — and how big — any negative impact might be remains to be seen, Clark and others say. If, for example, one or more of the crippled nuclear reactors at Japan’s Fukushima Daiichi plant go into complete meltdown and there’s a large release of radiation into the air, the chilling effect — and with it, a downward push on home values in nuclear towns like Buchanan, New York. Plymouth, Massachusetts, and San Luis Obispo, California — could last longer than the maximum of two to three years economists would consider temporary.

Already, several homes within a short distance of the Plymouth Nuclear Power station have shown price drops, according to Trulia.com.

What’s more, if the public outcry and regulatory scrutiny continues, some states might force disclosure about a home’s distance from a nuclear power plant in real estate sales, right alongside disclosures about termite damage, roof leaks and boiler conditions, says Peter G. Miller, founder of consumer real estate website ourbroker.com. California already requires such disclosure within a certain distance. California, along with Oregon, are the only states that also require disclosure of earthquake zones, even though would-be buyers could easily find the information themselves, says Walter Molony, a spokesman for the National Association of Realtors.

After the 1979 Three Mile Island nuclear plant accident in Pennsylvania, home prices in the area took a dive, but the negative impact leveled out after a couple of years, according to various research studies. When a new power plant — nuclear or otherwise — or other perceived hazard (think hazardous waste treatment plant or garbage processing facility) is approved to be built, the same scenario often plays out. In the first year or two, homeowners will flood the market with homes for sale, depressing prices. Gradually, as workers at these new facilities move in — bothered less by the stigma — home values and prices tick up. Except in thinly-populated areas, though, that increase in value will rarely return to pre-hazard levels. Part of the reason, say experts, is the psychological discount for danger that’s expected by buyers.

Still, Molony says even with natural disasters, most of the time the impact on home prices is temporary and take time to show up in sales and price data. “Trends like this don’t materialize in market behavior overnight.”

That might be true for broader data sets, but probably not for actual buyers in the market today. Michael Graessle, president of the Westchester Putnam Association of Realtors, says few would-be buyers have asked about the Indian Point nuclear power plant along the Hudson River in Buchanan, New York, in the past.

 

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