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Buying a home can be a prudent investment. It can also be a risky proposition.

The latter is the focus of a new report from RealtyTrac that looks at a threat that can strike any home at any time: natural disasters.

Some 2,318 counties across the country were given a natural disaster risk score —very low, low, moderate, high, and very high — based on the chances the areas have of being hit by earthquakes, hurricanes, tornadoes, floods, and wildfires, according to predictive models and historical data.

A total of 35.8 million US single-family homes and condos are in counties that have a high or very high risk of natural disasters, according to the 2015 U.S. Natural Disaster Housing Risk Report. The combined estimated market value of these homes is $6.6 trillion. These homes represented 43 per cent of all homes measured; in total, RealtyTrac analyzed 83.4 million single-family homes and condos.

“In the interest of personal safety and protecting the value of what is likely their biggest financial asset, prospective buyers and investors should be aware of any natural disaster risk impacting a potential home purchase,” said Daren Blomquist, RealTrac’s vice president, in the report.

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Chart: RealtyTrac

California, which has some of the hottest real estate markets in the US, also has the most homes in high risk or very high risk counties of any other state with 8.4 million of them. Other coastal states followed with Florida at 6.7 million homes, New York at 2.4 million, and New Jersey at 2.3 million.

Out of the metro areas surveyed, New York has the highest number of homes in the two riskiest categories with 3.5 million homes in counties deemed high risk or very high risk. Los Angeles was second with 2.5 million and Miami was third at 1.9 million.

Buying a home in risky areas comes at a cost, of course, but not only in repairs and insurance premiums. The average value of a home in counties facing a very high risk of natural disasters was $170,237, which is actually higher than in very low risk counties where the average was $151,793.

However, lower-risk areas provided a better return on investment. Price growth in these counties was greater over the past decade than in their high-risk counterparts. The home prices in very-low risk counties that had “sufficient historical home price data” increased by 9.5 per cent since 2005, while the riskiest counties saw prices decrease by 6.4 per cent.

Blomquist noted in the report that even if potential home buyers are aware of the risks of natural disaster in a region, that alone usually won’t stop them from purchasing a home. However, even if a home buyer is intent on purchasing property in Tornado Alley, there are still benefits to knowing the risks.

“It will help buyers make a better-informed decision about where to buy and also be prepared in terms of appropriate insurance coverage and family contingency plans depending on the type of natural disaster risks most affecting the home they end up purchasing,” said Blomquist in the report.

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