The Effect of FORTIFIED Construction on Home Resale Value
The Alabama Center for Insurance Information and Research (ACIIR), now known as the Center for Risk and Insurance Research (CRIR) at the University of Alabama, published "Estimating the Effect of FORTIFIED Home Construction on Home Resale Value," a peer-reviewed study analyzing home sales data from Mobile and Baldwin counties in Alabama.
The study found that switching from conventional construction to FORTIFIED designation increases home value by nearly 7%, holding all other variables constant. It was co-authored with professors from Auburn University and the University of Mississippi, with expertise in finance and real estate.
The study's authors note that the additional cost of building or retrofitting to FORTIFIED standards is often less than 7% of a home's value. That means the value increase alone is very likely to offset the investment, before factoring in insurance premium discounts or avoided storm damage costs.
The researchers concluded it is appropriate for appraisers and financial institutions to reflect FORTIFIED designations in home appraisals for mortgage purposes.
We are very confident in the results and hope they will affect public and private behavior to make exposed communities more resilient to natural disasters.
- Lars Powell, Director, Center for Risk and Insurance Research
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