You are probably unaware that literally millions of homes in the United States are at risk because of manmade environmental hazards. According to a report, roughly 25 million homes in the United States are located within zip codes with either high or very high risks. Of the 64 million homes within the zip codes analyzed, this represents a whopping 38 percent. The market value for all of the involved areas was just under $7 trillion.
In all, 7,751 zip codes were analyzed. These zip codes were comprised of sufficient home prices, as well as nationwide appreciation data for five specific manmade environmental hazards. The hazards included superfund sites, air quality, former drug labs, polluters, and brownfields. In addition, the level of risk was categorized as very low, low, medium, high, and very high.
Purchasing a home within one of the high-risk zip codes creates potential health and safety risks and could also be a bad financial investment. The reason is that the price of homes within those high-risk zip codes is, on average, much lower. The other problem is that 10-year appreciation was slower than in homes in zip codes with low risk for manmade environmental hazards.
The average home price in high-risk zip codes was on average $251,000, a full 15 percent less than the average $295,000 for homes in low-risk zip codes. Simply put, prices for homes in high-risk zip codes were 1.8 percent lower compared to the average from a decade ago. In comparison, homes in low- and very low-risk zip codes actually saw a 5.3-percent jump.
Also stronger in the low- and very low-risk zip codes was home appreciation over the past 12 months. From 2014 to 2015, the numbers increased an average of 7.3 percent, whereas homes in the high- and very high-risk zip codes experienced only a 6.4-percent increase. Although 10-year appreciation for homes in high- and very high-risk zip codes was significantly lower, there was actually a strong appreciation for five-year appreciation.
The top 12 metropolitan areas noted as high risk include Albuquerque, Anchorage, Cape Coral/Fort Myers, Charleston, Myrtle Beach, Naples, Palm Beach, Port St. Lucie, Provo/Orem, Salinas, Santa Rose, and Winston-Salem. Interestingly, within modern-day Miami, just 3 percent of its zip codes rated high or very high risk.
On the other side, the top 12 cities with the greatest number of high- and very high-risk zip codes include Riverside/San Bernardino, Akron, Cleveland, Stockton, Louisville, Reading, Toledo, El Paso, Los Angeles, Kansas City, Grand Rapids, and Bakersfield.
To live in a neighborhood with little risk, a buyer may need to think about going to an entirely different market. However, it is important to remember that even in zip codes with high and very high risk for manmade environmental hazards, it is possible to find a home deemed to be safe.
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