ATTOM Data Solutions, Irvine, was out Thursday with its 2017 U.S. Natural Hazard Housing Risk Index, which showed that the value homes that faced the greatest risk from natural hazards rose twice as fast as those with minimal risk.
The findings were not surprising given that homes near recreational amenities such as ocean beaches are more desirable and expensive than their counterparts in landlocked subdivisions surrounded by strip malls. But the analysis also considered homes in areas prone to tornadoes and earthquakes.
In technical terms, the analysis found that median home prices in U.S. cities in the 80th percentile for natural hazard risk (the top 20% with highest risk) have increased more than twice as fast over the past five years and over the past 10 years than median home prices in U.S cities in the 20th percentile for natural hazard risk (bottom 20 percent with lowest risk).
For the report ATTOM indexed natural hazard risk in more than 3,000 counties and more than 22,000 U.S. cities based on the risk of six natural disasters: earthquakes, floods, hail, hurricane storm surge, tornadoes, and wildfires.
Median home prices in cities in the top 20% for natural hazard risk have appreciated 65% on average over the past five years and 9% on average over the past 10 years while median home prices cities in the bottom 20% for natural hazard risk have appreciated 32% on average over the past five years and 3% on average over the past 10 years.
"Strong demand for homes in high-risk natural hazard areas has helped to accelerate price appreciation in those areas over the past decade despite the potential for devastating damage to homes that can be caused by a natural disaster — as evidenced by the recent hurricanes that made landfall in Texas and Florida," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "That strong demand is driven largely by economic fundamentals, primarily the presence of good-paying jobs, although the natural beauty that often comes hand-in-hand with high natural hazard risk in these areas is also attractive to many homebuyers."
In the state of Florida, median home prices in cities with the highest flood risk were up 8% on average from a year ago and up 66% from five years ago while median prices in cities with the lowest flood risk were up 10% from a year ago and 70% from five years ago.
Median home prices in Florida cities with the highest hurricane storm surge risk were up 8% from a year ago and 47% from five years ago, while median prices in cities with the lowest hurricane storm surge risk were up 11% from a year ago and up 67% from five years ago.
Homeowners in cities in the top 20% for natural hazard risk have 32% home equity on average compared to 21% home equity on average for homeowners in cities in the bottom 20% for natural hazard risk.
Seriously underwater homes (LTV of 125 percent or higher) account for 6.4% of all homes in cities in the top 20 percent for natural hazard risk compared to a seriously underwater rate of 9.9% on average for homes in cities in the bottom 20% for natural hazard risk.
Homeowners who sold in the first six months of 2017 had owned for an average of 8.89 years in cities in the top 20% for natural hazard risk compared to an average home-ownership tenure of 8.03 years in cities in the bottom 20% for natural hazard risk.
Among the 735 U.S. counties included in the housing trends analysis, those with the highest overall natural hazard index were Oklahoma County, Oklahoma; Wakulla County (Tallahassee), Florida; Monroe County (Key West), Florida; Cleveland County (Oklahoma City), Oklahoma; and Nevada County (Truckee), California.
Among 50 U.S. cities included in the analysis with a population of at least 500,000, those with the highest overall natural hazard housing risk index were Oklahoma City, Oklahoma; San Jose, California; Los Angeles, California; Bakersfield, California; and Seattle, Washington.
