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Homes Within Natural Hazard Risk Areas Have Higher Prices

Sep 21, 2017
Sometimes, living dangerously can lead to home seller gains, according to new data from ATTOM Data Solutions

Sometimes, living dangerously can lead to home seller gains, according to new data from ATTOM Data Solutions.
 
In a new study, ATTOM found the median home prices in cities in the 80th percentile for natural hazard risk—also known as the top 20 percent with highest risk—have increased more than twice as fast over the past five years and over the past 10 years than those in the 20th percentile for natural hazard risk, or the bottom 20 percent with lowest risk.
 
ATTOM analyzed housing trends in 3,441 cities and 735 counties for its study and found that median home prices in cities in the top 20 percent for natural hazard risk have appreciated 65 percent on average over the past five years and nine percent on average over the past 10 years. In comparison, the median home prices cities in the bottom 20 percent for natural hazard risk have appreciated 32 percent on average over the past five years and three percent 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.”
 
But whether this level of appreciation will continue is unclear, especially in view of this year’s hurricane season. “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 added. “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.”

 
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