Earthquakes are not uncommon in the United States, and they can have severe impacts on the local real estate markets in areas where they are more likely to occur. In this guide, we will explore induced earthquakes, what causes them, and their impact on real estate and property values.
If you're curious about your property's induced or natural earthquake risk, get a free LandGate property report and check out the induced and natural earthquake risk index scores:
What is an Induced Earthquake?
Induced earthquakes are earthquakes or tremors that are caused by human activity when the Earth's crust is stressed or strained. Induced earthquakes are also known as human-induced earthquakes or induced seismicity. Induced earthquakes have been documented at many locations throughout the United States and in many other countries around the world.
What is the Difference between Induced and Natural Seismicity?
Induced earthquakes are caused by human activities, such as geothermal energy production, fracking, and wastewater disposal, while natural earthquakes are caused by sudden movement along fault lines and tectonic plate boundaries. The National Earthquake Information Center identifies about 20,000 earthquakes around the globe each year, or approximately 55 per day on average.
What Causes Induced Earthquakes?
Induced earthquakes can be caused by hydraulic fracturing (fracking), mining operations, geothermal energy production, intensive construction, and the injection of fluids into deep wells for waste disposal.
An example of an induced Earthquake is the 2011 Prague, Oklahoma earthquake. This 5.7 magnitude earthquake is thought to have been caused by waste-water disposal wells from oil and gas drilling operations. The fracking-linked wastewater injection site may have triggered a cascade of smaller earthquakes that ultimately triggered the 5.7 magnitude earthquake that damaged approximately 200 buildings.
Induced Earthquakes and Real Estate
The connection between induced earthquakes and real estate has become a growing concern in recent years. As these earthquakes can cause damage to buildings and infrastructure, they can have a significant impact on the real estate market in affected areas. Buildings and structures that are not designed to withstand earthquake activity can sustain serious damage, leading to decreased property values and potential safety hazards for occupants.
When buildings are damaged as a result of an earthquake, property owners will have to repair or replace their properties. However, unlike damage from fires, earthquake damage is excluded from hazard insurance policies. Earthquake insurance is separate from hazard insurance policies. If a property owner does not have earthquake insurance coverage in the event of an earthquake, the property owner will have to cover the cost of the repairs out of pocket.
What is the Impact of Induced Earthquakes on Property Values?
Earthquake damage significantly devalues properties, and the potential for such damage impacts property values in a given area. However, not all earthquakes have equal effects on the real estate market. The severity and location of an earthquake, as well as the preparedness of the affected area, all contribute to its impact. For instance, earthquakes in regions with robust building codes and earthquake-resistant construction tend to have a lesser impact on the real estate market compared to those in areas with weaker building codes.
Which States are Most At-Risk for Induced Earthquakes?
According to the United States Geological Survey (USGS), the states that are most at-risk for induced earthquakes are Oklahoma, Kansas, Texas, Colorado, New Mexico, and Arkansas. Among these, Oklahoma and Texas have the largest populations at risk of exposure to induced earthquakes.
How Can I Measure the Risk of Induced Earthquakes?
Induced earthquakes can have a significant impact on the real estate market, both in terms of property values and availability. The damage caused by earthquakes can lead to decreased property values and a decreased demand for properties in the affected areas. Property owners may be less willing to sell their properties, and there may be a shortage of properties on the market. Additionally, earthquakes can affect the insurance market and lead to long-term changes in the real estate market. While the impact of earthquakes on the real estate market is not uniform across all earthquakes, it’s important for potential buyers and property owners to be aware of the risks and potential impacts of earthquakes on the real estate market.
Evaluating a property's risk in regards to earthquakes is more complex than finding the nearest fault line- the chances of an earthquake damaging a property is dependent on many factors. You can evaluate any property's induced and natural earthquake risk within LandApp's Property Reports tool. By subscribing to LandApp for $10 per month when billed annually, or $16 per month when billed monthly, you can access these proprietary risk index scores on the nationwide level:
