The FINANCIAL -- RealtyTrac on December 17 released its second annual Manmade Environmental Hazards Housing Risk Report, which shows 25 million U.S. homes are in zip codes at high risk or very high risk for manmade environmental hazards — representing 38 percent of the 64 million homes in all zip codes analyzed. The combined estimated market value of the 25 million homes in high risk or very high risk zip codes was $6.9 trillion as of November.
For the report, RealtyTrac analyzed 7,751 zip codes with sufficient home price and appreciation data nationwide for the prevalence of five manmade environmental hazards: air quality, superfund sites, polluters, brownfields and former drug labs. An index based on these five factors was assigned to each zip code, and index scores were divided into five categories of risk: very high, high, medium, low and very low (see full methodology and definitions below).
“Buying a home in an area with low risk of manmade environmental hazards may not just be a good idea for health and safety reasons; it may also be good for financial reasons,” said Daren Blomquist, vice president at RealtyTrac. “Across the country, home prices in high risk zip codes were lower on average, and appreciation over the last 10 years slower when compared to home prices and 10-year appreciation in low risk zip codes.”
Median home prices lower, 10-year price appreciation slower in high-risk zip codes
The median sales price of homes in high risk zip codes for manmade environmental hazards was $251,106 in 2015 on average, 15 percent lower than the median sales price of $295,202 for homes in zip codes with low or very low risk.
Median home prices in high risk and very high risk zip codes were still 1.8 percent lower than they were 10 years ago on average, even while median home prices in low risk zip and very low risk zip codes were up 5.3 percent from 10 years ago.
Home price appreciation over the past year was also stronger in low and very low risk zip codes, up an average of 7.3 percent from 2014 to 2015 compared to an average increase of 6.4 percent in high risk and very high risk zip codes. Five-year price appreciation was stronger in high risk and very high risk zip codes, up 27.7 percent in 2015 from 2010 compared to an average increase of 26.8 percent in low risk and very low risk zip codes.
12 major markets with no high risk zip codes
There were 12 major metro areas with no zip codes at high risk for manmade environmental hazards: Albuquerque, New Mexico; Anchorage, Alaska; Cape Coral-Fort Myers, Florida; Charleston, South Carolina; Myrtle Beach, South Carolina; Naples, Florida; Palm Bay, Florida, Port St. Lucie, Florida; Provo-Orem, Utah; Salinas, California; Santa Rosa, California; and Winston-Salem, North Carolina.
“Miami is a 21st century city, with most of our development post World War II, with no real environmental baggage from the past,” said Mike Pappas, CEO and president of the Keyes Company, covering the South Florida market, where only 3 percent of zip codes were rated very high risk or high risk for manmade environmental hazards. “We have clean air, blue skies, clean water and clean industry.”
“Dirty Dozen” markets dominated by Southern and Central California, Northeast Ohio
The top 12 “dirty dozen” metro areas with the highest percentage of zip codes at high risk for manmade environmental hazards were Riverside-San Bernardino in Southern California; Akron, Ohio; Cleveland, Ohio; Stockton, California; Louisville, Kentucky; Reading, Pennsylvania; Toledo, Ohio; El Paso, Texas; Los Angeles; Kansas City; Grand Rapids, Michigan; and Bakersfield, California.
“The lingering effects of drug particles in a home where drugs have been stored or made can have devastating effects on the health of the next occupants of the property. With a record number of drug overdose deaths across Ohio this year, there has been an increase in enforcement to determine where the drugs are stored and made,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio. “As public record history details are usually not readily available regarding drug use in a property, consumers are strongly encouraged to require an air quality check to their pre-purchase property inspections. Many Realtors maintain a list of certified inspectors that offer such services to provide the added benefits of environmental inspections to insure the health, safety, and welfare of consumers in their home.”
“Finding a home in a low risk neighborhood sometimes may mean that buyers will need to consider moving to a completely different market, but that is certainly not always the case,” Blomquist said. “Even in metro areas dominated by high risk zip codes, buyers can dig deeper down to the individual property level to evaluate risk of manmade environmental hazards using property-specific research tools such as the new Home Disclosure Report powered by RealtyTrac.”