Conventional logic would lead any real estate professional to believe that neighborhoods plagued with pollution and other environmental issues would be detrimental to home values, but in Colorado that isn’t the trend.
Developers are stepping up to invest in properties with environmental issues.
One example is the Argo Gold Mill and Mine site.
According to the Denver Post, the area falls within a Superfund site the federal government has spent three decades and more than $62 million to clean up.
Remediation included a water treatment plant that finally restored Clear Creek to a place where fish can live.
“The runoff from the mines in Idaho Springs goes through a treatment plant. It has been mitigated,” the city’s mayor pro tem, Bob Bowland told the newspaper. “I would call it a very successful Superfund site mitigation.”
Demonstrating confidence, Bowland hooked up with an investment group that purchased the Argo Gold Mill and plans to spend $70 million redeveloping the 23-acre site.
The 80452 ZIP code in Idaho Springs carries the second-highest environmental risk in the state, according to an index from ATTOM Data Solutions, which examined 8,642 ZIP codes nationally with more than 1,000 homes.
According to the research, an estimated 10 percent of the 1.6 million Colorado homes captured in the analysis were within ZIP codes rated very high for environmental hazards. Most are located in older industrial areas of Denver, Aurora, Golden, Boulder, Pueblo, Fort Morgan, Greeley and Sterling.
Nationwide, ATTOM Data Solutions’ third annual Environmental Hazards Housing Risk Index shows that 17.3 million single family homes and condos with a combined estimated market value of $4.9 trillion are in ZIP codes with high or very high risk for at least one of four environmental hazards: Superfunds, brownfields, polluters or poor air quality.
The 17.3 million single family homes and condos in high-risk zip codes represented 25 percent of the 68.1 million single family homes and condos in the 8,642 zip codes analyzed.
A risk index for each of the four environmental hazards was calculated for each of the 8,642 zip codes, and the indexes were each divided into five categories of risk: very low, low, moderate, high and very high.
Of the 8,642 zip codes analyzed in the survey, 6,238 with 50.8 million single family homes and condos (75 percent) worth a combined $16.9 trillion did not have a high or very high risk index for any of the four environmental hazards.
“Home values are higher and long-term home price appreciation is stronger in ZIP codes without a high risk for any of the four environmental hazards analyzed,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Corresponding to that is a higher share of homes still seriously underwater in the ZIP codes with a high risk of at least one environmental hazard, indicating those areas have not regained as much of the home value lost during the downturn.”
However, Blomquist noted that home price appreciation over the past five years was actually stronger in the higher-risk ZIP codes, which could reflect the strong influence of investors during this recent housing recovery.
“Environmental hazards likely impact owner-occupants more directly than investors, making the latter more willing to purchase in higher-risk areas,” he said. “The higher share of cash sales we’re seeing in high-risk ZIP codes for environmental hazards also suggests that this is the case.”
Denver is home to the most polluted residential area in the country, but that hasn’t hurt property values there. Home values are up 250 percent in the last five years in the 80216 ZIP code, and 30 percent in the last year alone.
According to the survey, Colorado’s 80216 ZIP code had the total environmental hazard index combining the four individual hazard indexes. Denver’s index was at 455, with a 2016 median sales price of $227,609 and a home-seller gain of 75.1 percent with 4.9 percent of homes “seriously underwater.”
After Denver, ZIP codes with the 10 highest Total Environmental Hazard Index values were in Denver; San Bernardino, Calif.; Curtis Bay, Md. (in the Baltimore metro area); Santa Fe Springs, Calif. (in the Los Angeles metro area); Fresno, Calif.; Niagara Falls, N.Y.; St. Louis; Mira Loma, Calif. (in the Riverside-San Bernardino metro area); Hamburg, Pa. (in the Reading metro area); and Tampa, Fla.
In the 26 ZIP codes classified as highest risk in Colorado, home prices have risen an average of 71.6 percent the past five years. In the moderate risk ZIP codes they are up 48.8 percent and in the very low risk category, Colorado’s most environmentally pristine communities, they are up 52.8 percent.