US Housing Market Is Overvalued by Billions Due to Ignored Flood Risk
Home values don’t currently reflect expected losses from flooding, a new study finds, leaving low-income homeowners especially vulnerable to price deflation.
US homes in areas prone to floods may be currently overvalued in the range of $121 billion to $237 billion, according to a report published Thursday in the journal Nature Climate Change.
Roughly, that number is derived by looking at how much homes are selling for now and subtracting the estimated average annual losses that they will incur from flooding over the next 30 years (the average length of a mortgage in the US), as determined by the First Street Foundation, a nonprofit that seeks to improve awareness of climate change-related risks like increased flooding. The report was authored by researchers from First Street, the Environmental Defense Fund and Resources for the Future, among others.