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How disasters — manmade or natural — affect the real estate market

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This Lawrence home was one of several properties destroyed in the September 2018 gas explosions. Carl Russo/The Eagle-Tribune via Associated Press

Realtor Michelle Oates was in her Andover office on Sept. 13, 2018, when she was told to evacuate. As she and her colleagues stood paralyzed in the parking lot, sirens blaring in the distance and helicopters hovering overhead, selling houses was the last thing on her mind.

The deadly and destructive Columbia Gas explosions that rocked the Merrimack Valley that day set off more than 120 fires and obliterated five homes, plunging portions of Andover, Lawrence, and North Andover into chaos. “It was traumatic for everyone and catastrophic for some,’’ said Oates, an agent with Coldwell Banker Residential Brokerage.

A disaster like that inflicts scars on a community that take time to heal. It would be many more days before emergency vehicles no longer elicited panic as they passed, and fears of additional explosions began to subside. But what effect does a natural or manmade disaster have on a local housing market?

As the scope and source of the explosions became apparent — a sprawling network of extremely over-pressurized gas lines — officials shut off electric service (and, house by house, gas meters) to reduce the fire risk. Thousands of homeowners were displaced or left without heat and hot water, some for months.

So at first, Oates said, business simply came to a halt as the community focused on safety and recovery. “We had many buyers, sellers, and even agents and attorneys evacuated from their homes or without electricity,’’ Oates said. Some pending sales, meanwhile, got stuck in limbo, with lenders unwilling to sign off on a mortgage for a house with no working heat or stove, even if the buyer was OK with it. “So in some cases, transactions were seriously delayed or fell apart if a buyer couldn’t wait indefinitely,’’ she added.

Some sellers pulled their active listings off the market, and others postponed putting homes up for sale. “My clients were freaking out,’’ said Andres Castañeda, an agent with the Fermin Group in North Andover. He had a seller ready to list her South Lawrence home when the explosions erupted. She was worried that no one would want to buy in her neighborhood. “We held it back for a month to let things settle down,’’ Castañeda said.

By the time things returned to something closer to normal, Oates said, it was mid-November — not an ideal time to list a property — so many sellers just waited for spring, sending the local real estate market into early hibernation.

Buyers, meanwhile, became understandably skittish about homes with natural gas heat, giving a temporary advantage to those that use oil, propane, or electricity, Oates said. “Just a few days after the explosions, I remember fielding a call from a prospective buyer from out of state who said she was only interested in homes without gas,’’ she said. “Normally, many buyers have a strong preference for natural gas, so it was interesting to see agents highlighting the fact that a property did not have natural gas in their marketing.’’

There were other unexpected effects, including the widespread updating of old heating systems. Thousands of homes that didn’t catch fire nonetheless had appliances or furnaces the gas lines damaged, and Columbia Gas paid for their replacement — a headache-inducing process. “Many went two months or more without heat, hot water, stoves, or clothes dryers while waiting for their new gas lines and meters to be installed,’’ Oates said. “But in the end, they received brand-new, high-quality heating systems and appliances. So that was definitely a silver lining.’’

In fact, when Castañeda’s Lawrence client finally did list her home, it sold for $20,000 above the asking price. “She ended up having her whole heating system replaced, and when we hit the market, that was a big selling point for buyers,’’ he said.

But when hundreds of homes are damaged at once, it can be frustratingly difficult to get even urgently needed repairs made. “Contractors, construction workers, and materials all become hard to come by because of the tremendous demand,’’ said Erik Josowitz, an analyst at InsuranceQuotes.com. Between the flood of insurance claim payouts and concentrated demand for contractors, prices can often spike after a disaster, too — so it’s not always smart to take on a long-awaited remodel during disaster reconstruction, Josowitz added.

Homeowners can also find it harder to obtain an insurance policy after a calamity, as insurers adjust their rules and reconsider the risk of flood, fire, or storms hitting the area. “Coverage may be significantly more expensive or even unavailable after a disaster in your region, even if your property wasn’t damaged,’’ Josowitz said.

While those factors can make it complicated to stay put after a disaster, selling can be difficult, too. Madelene Cheney, founder and broker at Red Door Real Estate in Quincy, said one of her listings — set on a dirt road some 20 feet from the seawall — struggled to sell after back-to-back nor’easters clobbered Quincy’s Adams Shore and Houghs Neck neighborhoods in March 2018. News footage of submerged streets and dramatic boat rescues seemed to linger on people’s minds as they toured the home, even though it had emerged from the flooding completely unscathed.

Some 200 other homes were not so lucky, and the storm left a number of them uninhabitable. Cheney consulted with a few rattled residents who considered selling after the nor’easter, and she expected to see a wave of new inventory hit the market as water-weary homeowners left for higher ground. It never came. “I think that was mainly because people just didn’t want to leave Houghs Neck,’’ she said. If anything, the storm proved a rallying point for neighbors, she noted, bringing the already tight-knit community closer together.

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Rescuers help residents evacuate a home on Post Island Road in the Houghs Neck section of Quincy after flooding devastated the area in March 2018. —John Tlumacki/Globe staff/File 2018

Almost two years later, demand is still strong in this relatively affordable corner of Quincy. But it’s not that buyers have forgotten about the area’s vulnerability. “There’s a lot more questions from buyers about flood insurance,’’ Cheney said. However, she’s able to tell buyers that the city is spending more than $17 million to rebuild and raise the existing seawall by 2 to 4 feet and on other protective measures, an investment that has lowered federal flood insurance premiums by about 5 percent.

“I’ve had to educate myself on those types of things, rather than just the features of a house,’’ she said. “It’s no longer as simple as, ‘Oh, look at this beautiful view.’ ’’

Because the Federal Emergency Management Agency flood maps are available to the public, many buyers understand the risk they’re taking when they buy in a documented flood plain, said Jeffrey Cohen, a University of Connecticut professor of finance and real estate.

However, as the climate warms and storms grow stronger and wetter, locations once considered safe are also getting hit — and when our expectations of risk change, home values can react in kind. Cohen is seeing that play out in his current research on New York City home prices before and after Superstorm Sandy ravaged the city in 2012.

When storm flooding extends beyond the FEMA flood zones, “this is an unanticipated ‘surprise’ that can have an impact on house prices,’’ Cohen said .In some cases, homeowners learned that they were more vulnerable to flooding than FEMA predicted, he said, an unwelcome discovery that increased their perceived risk and had a negative impact on local prices.

Meanwhile, in areas where flooding is likely, many states are purchasing and removing at-risk residences as part of a climate-mitigation strategy. They convert the lots into public green space, creating more elbow room for rising riverbanks or surging seas and establishing a better buffer against floodwaters for the homes that remain.

After Tropical Storm Irene brought devastating flooding to Vermont in 2011, the state used more than $20 million in federal disaster funds to buy out roughly 140 flood-damaged and flood-prone homes. “The buyouts helped people who had had their lives turned upside down by Irene, while also ensuring that no future development would occur in those flood-prone locations,’’ said Ben Rose, recovery and mitigation section chief at Vermont Emergency Management.

Workers examine the site of the flood-damaged K1 lodge at Killington Ski Resort on Sept. 1, 2011, in Killington, Vt. —Matthew Cavanaugh/Getty Images

Rose sees buyouts as a valuable climate-adaptation tool where “strategic retreat’’ is necessary, but adds that there’s a limit to what they can accomplish. “Because Vermont’s villages and mills were built along rivers and streams, flood vulnerability is baked into our land-use pattern,’’ Rose said. “But the buyout program provides direct recovery benefits for individual flood survivors, and it makes perfect sense from a long-term societal cost-avoidance standpoint.’’

Some towns choose not to participate in the buyout program because they don’t want to lose properties from their already lean tax base, Rose said. But in communities where flood-ravaged structures get removed and riverbanks recover, he said, the feedback has been positive.

A series of buyouts in Northfield, Vt., for example, resulted in a community area with gardens and a soccer field along the Dog River, while in Quechee Village, a vulnerable old mill structure was replaced with a pocket park where people can picnic along the river. And in that way, some good has emerged from Irene’s destruction.

Likewise, the legacy of the deadly Merrimack Valley gas explosions holds both horrors and hope. Not to be lost in the devastation, Oates said, was the galvanizing effect it had on the community.

“The experience brought people together in many wonderful ways,’’ Oates said. “People rallied to provide home-cooked meals, financial assistance, or even use of their showers for those in need. . . . Ultimately, I think the sense of community in Andover, North Andover, and Lawrence has become stronger than ever.’’

Jon Gorey blogs about homes at HouseandHammer.com. Send comments to jongorey@gmail.com. Follow him on Twitter at @jongorey. Subscribe to our free real estate newsletter at pages.email.bostonglobe.com/AddressSignUp.