A new report says that almost 36 million single-family homes and condos in the U.S. are located in counties with high- or very-high risk of at least one type of natural disaster. The report, from data provider RealtyTrac, found that homes and condos in counties with high- or very-high natural hazard risk had an estimated market value of $6.6 trillion. Of that, homes with an estimated market value of $4.7 trillion are located in counties vulnerable to hurricanes. A report from January by the National Association of Insurance Commissioners shows that six of the ten costliest insured property catastrophes in the U.S. through 2013 were hurricanes, including Hurricane Katrina in 2005. States with the most vulnerable counties for all types of natural disasters include some of the top markets for foreign homebuyers, such as California, with 8.4 million properties, and Florida, with 6.7 million.
The RealtyTrac report examined what these ever-present natural threats meant for house prices.
It turns out a house at risk of a tornado or flood doesn’t necessarily mean a potential buyer would pay less for a property. In fact, homes at greater risk can command higher prices. According to RealtyTrac, the average estimated market value of a home in a very-high risk county is $170,237, compared with $151,793 for a property in a very-low risk county. To be sure, home appreciation over the past decade was stronger in areas less prone to natural disasters. Over a 10-year period, sale prices in counties with very low risk increased 9.5% on average, compared with a 6.4% average decrease for areas with a very-high risk level. The threat of natural disasters also drives up the monthly costs of homeownership. In 2012, the average premium to insure a home in Florida was $2,104, essentially about double the average premium nationwide, according to the NAIC’s report. In California, the price was $2,084. “In most cases, learning about natural disaster risk will not stop a home sale, but it will help buyers make a better-informed decision about where to buy and also be prepared in terms of appropriate insurance coverage and family contingency plans,” said Daren Blomquist, vice president at RealtyTrac, in a statement. For its report, RealtyTrac analyzed five different natural disasters posing a risk to housing: earthquake, hurricane, tornado, flood and wildfire. The company also assigned a combined natural disaster risk score from 0 to 300, with 300 representing the most risk, and then assigned counties one of five different categories of risk. Read the full U.S. Natural Disaster Housing Risk Report here. Write to Andrea López Cruzado at andrea.lopez@dowjones.com Follow Mansion Global on Facebook, Twitter and Instagram Write to us at info@mansionglobal.com