More than 17 Million Homes at Risk of “Environmental Hazards”
by Carole Ellis
About one in every four homes is at risk for at least one “environmental hazard” according to the third annual ATTOM Data Solutions Environmental Hazards House Risk Index. ATTOM defined an environmental hazard as an issue falling under the category of “poor air quality, superfunds, brownfields, or polluters.” These issues encompass everything from high levels of particulate matter in the air to the potential release of hazardous substances and proximity to industrial facilities that could result in toxic chemicals into the area. Not surprisingly, ATTOM noted, homes not in these risk areas tend to have higher home values and appreciate more over time. However, properties in risky areas have shown stronger appreciation over the past five years when compared to properties in areas without environmental hazards.
Interestingly, ATTOM vice president Daren Blomquist said that real estate investors tend to be less directly affected by this environmental risk factor than homeowners. Investors “are more willing to purchase in higher-risk areas,” he said, noting that cash sales in high-risk ZIP codes also support this. ATTOM stratified risk as very low, low, moderate, high, and very high. The group analyzed 8,642 zip codes, and found 6,238 were neither high-risk nor very-high-risk for any environmental hazards.
The environmental hazards evaluated in the study are significant because they tend to not be high in buyers’ awareness. While most people are aware that there are legal requirements governing the disclosure of lead-based paint, radon, and mold, there are other state and federal regulations dealing with environmental disclosures in this study. Depending on the property’s location, sellers may be required to disclose the average percentage of days with/without “significant traces of carbon monoxide, fine particles, particulate matter, nitrogen dioxide, ozone, or sulfur dioxide” (air quality), whether or not their property is in an area affected by a national list of “priorities among the known releases or threatened releases of hazardous substances, pollutants, or contaminates” (superfunds), or part of a physical area that “may have the presence or potential presence of a hazardous substance, pollutant, or contaminate” (brownfield). Buyers also may have the right to inquire and/or be informed of a potential purchase’s proximity to industrial facilities “that manufacture or process more than 25,000 pounds of a toxic-release inventory-listed chemical or use more of a specified chemical in a given year” (polluters).
Even if state or federal regulations require these disclosures, often sellers themselves are not aware of their obligations to their sellers or of the risk factors themselves. As a result, it becomes the buyer’s responsibility to identify potential problems and decide if and how to factor them into an investing strategy. Some experts suggest that at a minimum, buyers do enough research to determine if it may be appropriate to test for past meth labs, asbestos, and buried fuel tanks. Buyers may wish to start with the ATTOM list of high-risk ZIP codes. The top 10 ZIP codes for overall environmental housing risk in 2016 were located in Denver, Colorado; San Bernardino, California, Curtis Bay, Maryland, Santa Fe Springs, California; Fresno, California; Niagra Falls, New York, St. Louis, Missouri; Mira Loma, California, Hamburg, Pennsylvania; and Tampa, Florida.
Would you buy in a high-risk area as an investment? How about to live?
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