What does Milwaukee County, Wisconsin, not have that Oklahoma County, Oklahoma, has?
A high level of natural hazard risk — specifically, from tornadoes. The two counties were at opposite ends of the risk spectrum in ATTOM Data Solutions' “2016 U.S. Natural Hazard Housing Risk Index,” issued Thursday.
The third annual study from ATTOM found that home sales — including for-sale apartments — in the first six months of this year increased by 4.2% year over year in the bottom fifth of United States counties with the lowest level of natural hazard risk. That's more than twice the 1.9% increase in the top fifth of U.S. counties that have the highest level of natural hazard risk, including earthquakes, floods, hail, hurricane storm surge and wildfires as well as tornadoes.
|Natural hazard risk makes a difference to homebuyers
“While price and affordability along with access to jobs are the primary drivers in local markets with strong increases in home sales activity in 2016, it's evident from this data that natural hazard risk does make a difference to homebuyers and investors who are active in this housing market,” says Daren Blomquist, SVP at Irvine, California-based ATTOM. “Even among the subset of counties where the median price is below the national median as well as among the subset of counties where home prices are still affordable for average wage earners, there is a consistent trend of stronger increases in home sales volume compared to a year ago in the lowest-risk markets for natural hazards compared to the highest-risk markets.”
More than 3,000 U.S. counties were indexed based on their risk level of natural hazards, and ATTOM also analyzed home sales and price trends in more than 800 counties with at least 100 single-family home sales in the first six months of 2016. Those 800 counties — with an aggregate total of more than 70 million single-family homes and condos — were divided into five equal groups based on the natural hazard risk index and assigned to one of five risk categories: Very High, High, Moderate, Low and Very Low.
Although on balance home sales are higher in lower-risk counties, that's not invariably the case. ATTOM's analysis found that over the past five years, increases in home sales volume has fallen below the overall national average in counties with the highest risk of earthquakes, hurricane storm surge, wildfires and floods. For counties with the lowest risk for those natural hazards, home sales volume has increases at a faster pace than the national average.
|Homebuyers favor tornadoes and hail over other natural risks
For markets with the highest risk of tornadoes and hail, home sales activity over the past five years has been higher than the national average. Those markets with the lowest risk for these hazards have seen below-average increases in home sales activity, according to ATTOM.
Separately, a study by Seattle-based Zillow has mapped out a risk which could be in the future for large areas of the coastal U.S.: rising sea levels. “Nationwide, almost 1.9 million homes (or roughly 2% of all US homes) — worth a combined $882 billion — are at risk of being underwater by 2100,” writes Krishna Rao, director of economic product & research at Zillow. “And in some states, the fraction of properties at risk of being underwater is alarmingly high.” Rao notes that in this case, “underwater” means just that: flooded out, rather than saddled with higher mortgage debt than the property is worth.
“More than one in eight properties in Florida are in an area expected to be underwater if sea levels rise by six feet, representing more than $400 billion in current housing value,” Rao writes. “In Hawaii, almost one in 10 homes are at risk.”
“Feel the Migration: Housing Trends by Natural Hazard Risk” infographic:
(Source: RealtyTrac)
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
