How fracking lowers the value of property and real estate
Save Colorado From Fracking :: 12 February 2014
According to a study performed in 2001 in Colorado, properties located near fracking areas were prone to loss of value. They were around 18% cheaper than those found further away from oil wells. In fact, the greater the distance between real estate and an oil well, the higher the price. It shows that folks don’t want or need to live in an area full of noise and pollution.
The Colorado School of Public Health claimed that property value decreased during the stages of construction because of natural gas extraction. Other influencing factors are dust, smoke, and traffic. Buyers and sellers are not currently active in areas which are at risk of water and air contamination.
The value of housing in Pennsylvania plummeted 80% in 2011. The only group that benefited from the plunge was Chesapeake Energy, a local drilling company. They were able to acquire more land for fracking purposes.
It’s harder to get a mortgage
Signing gas leases on property has become even harder thanks to regulations imposed by lenders. Fannie Mae and Freddie Mac require that borrowers have permission before they can put their signature onto a lease form.
Some banks have also become wary of giving out mortgages. Oil companies must agree to pay for damage they cause that lowers the value of the land. They must not cause any harmful environmental damage. Other banks ask people to not sign gas leases at all.
They are concerned that drillers may run their machinery illegally, not knowing it could damage the future potential for selling.
Home equity loans are also affected. One customer of a realtor said, “My loan was turned down because I had a contract to lease it with a gas company. I wasn’t capable of finding a mortgage broker who could help me out. I think that a similar scenario to the Flood Zone case is taking place at the moment.”
One way that owners can reduce the risk of damage is by taking out home insurance. Unfortunately, many insurance providers will not offer contracts on risky real estate. Ben, a citizen of Colorado, said that methane exploded in his house. He was not harmed in the accident, but there was much material damage. His home, originally worth over a quarter million dollars, was devalued to only $60,000.
Realtors in Huerfano County refused to sell or list the property for him. The average person would not want to have a house located near a dangerous spot. After living there for too long, they could develop breathing problems or burns.