The cost of man-made disasters can be extraordinary. Take the BP oil spill in the Gulf of Mexico at the beginning of the decade. The oil spill, which began at the Deep Horizon oil rig in 2010 led to spillage of more than 200 million gallons of crude oil over the following 84 days. To make matters worse, BP seemed incapable of turning the spigot off, making it one of the most massive oil spills in history – much more than a typical oil tanker slick.
The issue at the time was the damage that it was doing to the environment. As it turned out, the effect didn’t seem as significant as many people had imagined when the news first broke. However, social scientists wanted to find out whether it had had any effect on the local economy. Could it have adversely affected home prices?
The immediate economic consequences of the spill were dramatic. Researches saw between a 41 and 44 percent decline in sales volumes of properties in affected coastal areas during the year of the disaster. The effects ricocheted throughout the entire property industry, affecting both buyers, sellers, and real estate agents.
For people who could afford to wait it out and let prices rise again, the effect of the oil spill was transient. Property prices fell for a couple of years and then recovered. But as the following infographic shows, those facing foreclosure couldn’t afford to sell at the height of the slump. For them, it was a disaster. Check out how much man-made disasters affected the US property market in the infographic below.
Infographic by University of Alabama Birmingham