From hurricanes to wildfires, the United States experienced an active year of billion-dollar disaster events in 2018, many of which can increase the likelihood of mortgage defaults. This year, the nation has seen “bomb cyclones,” tornadoes and historic Midwest flooding. And it’s only April.
In a new report, online real estate company Redfin rated the 50 largest metropolitan areas according to their relative frequency of five major types of intensive and costly natural disasters — earthquakes, fires, floods, tornadoes and hurricanes — using a new metric called the natural disaster hazard score.
Each of the five components is measured on a scale of one to 100, where 100 is the most hazardous metro area for the category and one is the least hazardous. The overall natural disaster hazard score is an average of the five components’ frequencies.
Metros with low natural disaster hazard score ratings tend to have relatively affordable housing markets. Nine of the 10 least hazardous metro areas have median home prices below the $287,400 national median. Salt Lake City is the exception, ranking as the eighth-least hazard-prone metro area with a natural disaster hazard score of 16 and a median home price of $320,000.
Many of the most disaster-prone metros, including Washington, D.C., Los Angeles and New York City, have home prices well above the national median. These three areas also tend to be near the top of Redfin’s list of originating metros common among online home searchers looking to relocate to more affordable inland housing markets like Las Vegas, which ranks fourth among the safest-rated metros.
Mortgage delinquency rates and rental growth increase after natural catastrophes occur, according to housing analytics firm CoreLogic. “The disruption of a family’s regular flow of income and payments, as well as substantial loss in property value, can trigger mortgage default,” said CoreLogic chief economist Frank Nothaft in a 2018 report on disasters and housing. He added: “It affects not only homeowners who have seen their homes destroyed, but also workers who no longer have a job to go to.”
“When you buy a home you are paying for more than just the house,” said Redfin chief economist Daryl Fairweather. “There could be hidden costs associated with natural disasters. If a natural disaster strikes, you may have to pay for damage to your home or for the cost of evacuating your family. And even during times of calm, you may still need to pay for insurance against floods, fire or earthquakes. Some homes in more hazardous areas might seem more affordable if you are just looking at the sticker price, but they may end up costing more when risks related to natural disasters are factored in.”
Besides high housing costs in cities like Washington, D.C., Los Angeles and New York, the likelihood of natural disasters may be another factor driving home buyers away from the coastal areas. Redfin reports that when hurricanes, fires, earthquakes and floods are factored into the equation, the affordable inland metros are even more attractive destinations.
From Dallas to the nation’s capital, these are the 10 most hazard-prone housing markets.
No. 10 Dallas
Adobe Stock
Natural disaster hazard score: 37
Most at-risk hazard: Fires (63)
Median home price: $285,000
No. 9 Portland, Oregon
Adobe Stock
Natural disaster hazard score: 37
Most at-risk hazard: Earthquakes (81)
Median home price: $390,000
No. 8 New Orleans
Natural disaster hazard score: 39
Most at-risk hazard: Hurricanes (100)
Median home price: $210,000
No. 7 Minneapolis
Natural disaster hazard score: 40
Most at-risk hazard: Floods (91)
Median home price: $265,000
No. 6 Houston
Natural disaster hazard score: 41
Most at-risk hazard: Floods (68)
Median home price: $232,000
No. 5 Austin, Texas
Natural disaster hazard score: 41
Most at-risk hazard: Fires (73)
Median home price: $296,000
No. 4 New York City
Natural disaster hazard score: 41
Most at-risk hazard: Floods (75)
Median home price: $380,000
No. 3 Riverside, California
Adobe Stock
Natural disaster hazard score: 47
Most at-risk hazard: Fires (96)
Median home price: $366,000
No. 2 Los Angeles
Adobe Stock
Natural disaster hazard score: 52
Most at-risk hazard: Earthquakes/fires (100 each)
Median home price: $600,000
No. 1 Washington, D.C.
Adobe Stock
Natural disaster hazard score: 52
Most at-risk hazard: Hurricanes (82)
Median home price: $380,000