Reuters Money

By Jennifer Merritt

The ongoing nuclear crisis that followed the earthquake and tsunami in Japan has renewed fears about nuclear power plants across the globe. It has led to temporary shutdowns in some countries and in the U.S., a call for safety reviews of the 104 reactors at the 64 commercial nuclear facilities — some just outside major cities and population areas like New York, Boston and Orange County, California.

For some homeowners in and near towns that nuclear reactors call home, safety is just one concern. Those looking to sell might be in for a long wait for buyers along with a decline in sale prices and property values. Experts say buyers will carefully scrutinize how close their dream home might be to a nuclear plant.

Already, community message boards across the web are on fire with comments from prospective buyers reconsidering a purchase in or near a reactor town. “I’d be shocked if this didn’t have a temporary negative effect on selling prices,” said David Clark, professor of economics at Marquette University. Clark has conducted numerous studies on the impact of nuclear power plants and other negative external factors, like crime and other perceived hazards, on home values.

Just how temporary — and how big — any negative impact might be remains to be seen, Clark and others say. If, for example, one or more of the crippled nuclear reactors at Japan’s Fukushima Daiichi plant go into complete meltdown and there’s a large release of radiation into the air, the chilling effect — and with it, a downward push on home values in nuclear towns like Buchanan, New York. Plymouth, Massachusetts, and San Luis Obispo, California — could last longer than the maximum of two to three years economists would consider temporary.

Already, several homes within a short distance of the Plymouth Nuclear Power station have shown price drops, according to Trulia.com.

What’s more, if the public outcry and regulatory scrutiny continues, some states might force disclosure about a home’s distance from a nuclear power plant in real estate sales, right alongside disclosures about termite damage, roof leaks and boiler conditions, says Peter G. Miller, founder of consumer real estate website ourbroker.com. California already requires such disclosure within a certain distance. California, along with Oregon, are the only states that also require disclosure of earthquake zones, even though would-be buyers could easily find the information themselves, says Walter Molony, a spokesman for the National Association of Realtors.

After the 1979 Three Mile Island nuclear plant accident in Pennsylvania, home prices in the area took a dive, but the negative impact leveled out after a couple of years, according to various research studies. When a new power plant — nuclear or otherwise — or other perceived hazard (think hazardous waste treatment plant or garbage processing facility) is approved to be built, the same scenario often plays out. In the first year or two, homeowners will flood the market with homes for sale, depressing prices. Gradually, as workers at these new facilities move in — bothered less by the stigma — home values and prices tick up. Except in thinly-populated areas, though, that increase in value will rarely return to pre-hazard levels. Part of the reason, say experts, is the psychological discount for danger that’s expected by buyers.

Still, Molony says even with natural disasters, most of the time the impact on home prices is temporary and take time to show up in sales and price data. “Trends like this don’t materialize in market behavior overnight.”

That might be true for broader data sets, but probably not for actual buyers in the market today. Michael Graessle, president of the Westchester Putnam Association of Realtors, says few would-be buyers have asked about the Indian Point nuclear power plant along the Hudson River in Buchanan, New York, in the past.

“They know it’s there,” says Graessle, adding that as a big contributor to the tax rolls, the main impact of Indian Point so far has been to keep property taxes low around the area. Now, with media scrutiny and meltdown concerns in Japan, he anticipates a temporary shift. “With the issues now and the heightened concerns, it’s something people will want to know about.”

But that doesn’t mean buyers will retreat for long. Cynthia Lippolis, a licensed real estate broker with Prudential River Towns Real Estate has been selling homes near Indian Point for 26 years and says agents in her firm tell would-be buyers about the reactors — and about Sing Sing Prison in nearby Ossining — whether they ask or not.

“We have had people over the years who’ve decided not to buy in the area because of [the prison] or the [nuclear plant],” says Lippolis who says the area’s low prices and more-reasonable taxes are what attract buyers, many of whom are first-time homeowners leaving New York City. “Yes, some people will come here now and think it could happen here and be less interested, but I think it will be very temporary.” Any price declines, she says, would be hard to distinguish between the effect of nuclear nerves or the continued economic uncertainties.

Indeed, home prices in the town are lower than surrounding areas. According to data calculated by Zillow.com, the January median home value in Buchanan is currently just over $100,000 less than in neighboring Croton-on-Hudson, which is less than six miles downriver. While other factors, like a slightly shorter train ride to Manhattan for commuters and older housing stock play into that discrepancy, experts say it’s partly a discounted price for close proximity to the nuclear power plant in a densely-populated county where there are plenty of other towns to consider.

In Dana Point, California, according to Zillow’s calculations, home values are about $37,000 higher than in San Clemente, home to the San Onofre Nuclear Generating Station, just seven miles away. Still, San Clemente hasn’t seen the same price decreases as Orange County as a whole during the past few years. Experts say is partly due to another big factor that plays into the value of a nuclear-neighborhood home: visual cues. The San Onofre facility can’t be seen from most of San Clemente. Researchers like Clark have found a greater negative impact on home prices further away from a plant — but with a better view of the cooling towers or stacks — than areas closer to a reactor but without a view of it.

Such visual cues could amplify the negative impact on home prices near nuclear reactors now, too, as the tell-tale pictures and videos from Japan — and from local television reports on U.S. reactor facilities — make would-be homebuyers more aware of what they’re looking at on their Sunday house tours.

What’s more, if Miller’s hunch is correct — that some states will institute rules requiring sellers to disclose how close they are to a nuclear power plant — home sale prices could take an additional temporary hit, particularly if such rules are enacted quickly. “The people who are going to be influenced are the people currently in the market for homes,” he says.

For sellers near nuclear facilities, the best advice, say Miller, Clark and others, is to sit tight. “If you are a seller, you want as few barriers as possible in marketing your home,” says Miller. “This is something that’s going to bother people.”

If you don’t have to move or put your home on the market right now, a few months time can make a difference in how fresh the concerns are in the mind of buyers — and how much a home might need to be discounted to attract a sale.

“Sellers that lived in Buchanan and the surrounding areas know that someone who understands Indian Point is safe will come along and buy the house,” says Lippolis. This isn’t Homer Simpson’s Springfield, where nuclear plants glow green, after all.

The negative effects of nuclear neighborhood discounting could linger longer in places like California, where reactors sit in earthquake-prone areas and along the seashore. “It’s hard to get an accurate read of risk when you’re in the midst of the situation like this,” says Clark. “But any type of long-term impact would be more likely in properties that are relatively close to fault lines.”