Relocating the Residential Area after the Avalanche of 1995
After the avalanche of 16 January 1995 Súðavík's inhabitants moved to Ísafjörður or Reykjavík, the children's education now took place at Ísafjörður but Frosti's shrimp processing plant was shut down. Work commenced there again on 30 January but a part of the staff lived in Ísafjörður and drove to work. On 16 February Súðavík's elementary school was reopened and the educational process was moved back to Súðavík from Ísafjörður.
Subsequent to the avalanche Súðavík's inhabitants were faced with the difficult dilemma of deciding whether or not to start reconstruction. At a public meeting that was held in Ísafjörður on 23 January 1995 the majority of Súðavík's inhabitants expressed a decided will to move back to their home village on the condition that the village would be relocated to a save area within Eyrardalsá. On 26 January the head of the community was entrusted to get architects to make area plan proposals for a new residential area in the region of Eyrardalur. The District Council of Súðavík district made the request to the Avalanche Fund and the government's Civil Protection Department that the properties of the people of Súðavík within the avalanche danger zone would be bought instead of building protective walls above the village. It became clear that it would be far more efficient to buy 52 properties from the inhabitants and rebuild the ! village at a save location rather than to build protective walls, which would furthermore be inadequate regarding the safety of the inhabitants.
Once the decision had been made to relocate the residential area the first task was to provide those who lost their homes in the avalanche with temporary housing during the reconstruction. Eighteen summer cottages were transported to Súðavík and almost 70 inhabitants moved into the houses in March. On 30 April Vigdís Finnbogadóttir, the then president of Iceland, started the groundbreaking ceremony for Súðavík's new residential area and on 23 August the foundation was concreted for the first new house in the Eyrardalur area. A year later the construction was in full progress. In the fall of 1996 there were foundations for 51 new houses and the construction was finished in the winter. Eight houses were moved from the old residential area, four old houses and four that had been recently built when the avalanche fell.
The old residential area had 54 houses left standing and apartments in good conditions and soon the idea surfaced to utilize the houses as vacation homes during the summer season. At first the houses were offered for sale and many people from Súðavík who had moved from the area used the opportunity and bought a house. The corporation Sumarbyggð was founded in 1998 in order to run the business of renting the vacation houses in Súðavík and in May 1999 the first guests stayed in a house on behalf of Sumarbyggð.