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Induced Earthquakes & Real Estate

Updated: Dec 21, 2023


photograph of a destroyed paved road after an earthquake

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 earthquakes, their causes, and their impact on real estate.





What is an Induced Earthquake?


Induced earthquakes, also known as human-induced earthquakes or induced seismicity, are earthquakes that are caused by human activity. Earthquakes caused by human activities have been documented at many locations throughout the United States and in many other countries around the world.



What Causes Induced Earthquakes?


Human activities that can induce earthquakes can include hydraulic fracturing (fracking), mining operations, geothermal energy production, intensive construction, and the injection of fluids into deep wells for waste disposal.


The 5.7 magnitude earthquake that occurred near Prague, Oklahoma in 2011 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.



What is the Impact of Induced Earthquakes on 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 Earthquake Potential 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.



How Can I Measure the Risk of Induced Earthquakes?


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. Luckily, there are many tools available to help assess this risk. One example is the U.S. Geological Surveys' (USGS) earthquake hazard maps.


COMING SOON: Induced and natural earthquake risk reports for any U.S. property will soon be available in LandApp.



In conclusion, 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.



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