Fracking in the Housing Market
Many factors influence the value of a house. But here’s yet another factor to take into consideration when buying a home: hydraulic fracturing, also known as fracking. Hydraulic fracturing is the process of injecting high-pressure water and chemicals underground to free up the natural gas found in shale rock. Gas companies are staking claims on land for the sole purpose of fracking and extracting gas for profit.
How is this affecting the housing market? Homebuyers are wary of buying property on or near these drilling sites because of worry over water contamination. While contamination has not been scientifically proven and regulators of fracking claim it is not a safety hazard to nearby neighbors, many buyers are steering clear of the controversy. The value of homes in these areas that run off underground water have experienced significant declines in value. However, homes in these same areas with piped water have not been affected as greatly and are seen as safer investments.
To add yet another hurdle to the growing issue of fracking, many insurance companies have decided to no longer cover houses in these areas. Seeing as how new homeowners must be able to prove they have insurance on their new home, the difficulty in obtaining this insurance has driven many potential buyers out of the market for these homes. While still primarily an East Coast epidemic, it is growing and beginning to affect the entire nation.
Fracking and its affects on the housing market have not directly been dealt with yet. Caution continues to grow while regulators and the government seem to be content remaining silent on the issue.
Are you still a potential homebuyer in these areas? Or has fracking made you wary?