Homeowners in cities with the highest risk of natural hazards have more equity and keep their homes longer before selling. However, home price appreciation is slower in Florida and Louisiana cities with the highest flood risks, according to the ATTOM Data Solutions 2017 U.S. Natural Hazard Housing Risk Index.
The index found that median home prices in U.S. cities in the top 20 percent with highest risk for natural hazard increased more than twice as fast over the past five years and over the past 10 years than median home prices in cities in the bottom 20 percent with lowest risk for natural hazard. The index considered earthquakes, floods, hail, hurricane storm surge, tornadoes and wildfires as natural hazards.
Median home prices in cities with a very high risk for natural hazard rose 65 percent over the past five years and 9 percent over the past 10 years, according to the index. Median home prices in cities with a low risk for natural hazard increased 32 percent over the past five years and 3 percent over the past 10 years, the index found.
“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,” ATTOM Data Solutions Senior Vice President Daren Blomquist said in a release.
“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,” Blomquist added.
That home price appreciation trend, however, did not hold true in Florida and Louisiana cities with the highest flood risks. In Florida, for example, median home prices in cities with the highest hurricane storm surge risk rose 8 percent from a year ago and 47 percent from five years ago, while median prices in cities with the lowest hurricane storm surge risk jumped 11 percent from a year ago and up 67 percent from five years ago, according to the index.
In Louisiana, median home prices in cities with the highest flood risk were down 20 percent from a year ago and up 2 percent from five years ago; while median home prices in the lowest risk cities increased 5 percent over the past year and increased 37 percent over the past five years, the index found.
“There is some evidence in the data that real estate consumers in certain areas are beginning to more heavily factor natural hazard risk into their decisions, particularly when it comes to flood risk,” Blomquist said. “Counter to the national trend, home price appreciation is slower in Florida and Louisiana cities with the highest flood risk than in cities with the lowest flood risk.”
The report also found that homeowners in cities in the top 20 percent for natural hazard risk have 32 percent home equity on average compared to 21 percent home equity on average for homeowners in cities in the bottom 20 percent for natural hazard risk.
Additionally, the report found that homeowners who sold in the first six months of 2017 owned for an average of 8.89 years in cities in the top 20 percent for natural hazard risk compared to average homeownership tenure of 8.03 years in cities in the bottom 20 percent for natural hazard risk.
The report identified the cities with the highest overall natural hazard risk index as Oklahoma City; San Jose, Calif.; Los Angeles; Bakersfield, Calif.; and Seattle. The counties with the highest natural hazard risk were Oklahoma County, Okla; Wakulla County, Fla.; Monroe County, Fla; Cleveland County, Okla.; and Nevada County, Calif., the report found.
The report identified the cities with the lowest overall natural hazard housing risk index as Philadelphia; Phoenix; Buffalo, N.Y.; Orlando and Brooklyn, N.Y. The counties with the lowest natural hazard risk were Milwaukee County, Wis.; Cuyahoga County, Ohio; Muskegon County Mich.; and Lake County, Ohio, the report found.