About 8 per cent of the some 131 million housing units in the U.S. are at risk to natural disaster, according to a recent report by New RealtyTrac.
The
Natural Disaster Housing Risk Report assigns a natural disaster risk score to 3,138 county housing markets in the United States, and found that about 8 per cent of the 131 million U.S. housing units were located in very high-risk counties.
It is a consideration brokers need to remind clients who are in the market looking for a new home.
“The potential risk of a natural disaster may not be the first item on most homebuyer checklists for a dream home,” says Daren Blomquist, vice president at RealtyTrac, “but prudent buyers will certainly take this into consideration along with myriad other factors that could affect home value.”
New RealtyTrac reports that of the 3,138 counties analyzed, 373 were classified as very high risk, representing 12 per cent of all counties. That compares
to 3.9 million housing units in counties with very low risk (or 3 per cent of the U.S. total).
Scores assigned to each county’s housing market were based on risk data for three natural disaster events — hurricanes, tornados and earthquakes — and each county was assigned to one of five risk categories based on their score: very high risk, high risk, medium risk, low risk, and very low risk.
It is a consideration many insurers are focusing on now, given the dramatic rise in catastrophe claims over the past since the turn of the century.
According to the recent
Allianz Risk Pulse: Focus Natural Catastrophes briefing, the average annual cost of insured claims from natural catastrophes has increased eight-fold since 1970 (up from some $5 billion in the 1970s and 1980s to over $40 billion in 2010).
That dramatic rise can be attributed to the leap in home prices.
RealtyTrac reports that among the 34 counties with more than 500,000 housing units, the average median sales price in April 2014 was $268,470 – 56 per cent higher than the national median price of $172,000 in April.
Median home prices in April were up 34 per cent on average compared to five years ago in the counties with a high risk for natural disasters, the statement notes.
“The higher median home prices in many counties with a high risk for natural disaster indicates that other location-based factors such as weather and access to jobs override concerns about home damage as a result of earthquakes, tornados and hurricanes,” says Blonquist.
In all, 1,118 counties fell in the high-risk category, with a combined housing unit total of 61 million; 511 counties fell in the medium-risk category, representing 29.9 million housing units; and 865 counties fell in the low-risk category, representing 25.5 million housing units.
