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Home Valuation Needs to Consider the Risk of Climate Change
In their recent opinion piece, Katie Oran and Yuliya Panfil describe what they predict to be the effect of climate change on the future of housing in the United States. Oran and Panfil warn of a new kind of housing crisis, destroying home values and potential causing a major housing market crash, caused by neglecting to consider sea-level rise.
According to a report from First Street Foundation, federal flood maps don't account for 67% of homes at risk of flooding. Readers can use the organization's Flood Factor tool to determine current and future flood risk by address.
Oran and Panfil account for the damager caused by flooding in monetary terms:
Between 1980 and 2019, the cost of storm damage in the United States has totaled $1.75 trillion. That is $300 billion more than the estimated total value of all property that sits within 700 feet of the US coastline. To put it simply: the US Government and private insurance companies have spent more money rebuilding damaged coastal property than it would have cost to relocate every single home within this risky zone.
Risky mortgages are re-packaged and sold to such government-secured enterprises as Fannie Mae and Freddie Mac. Oran and Panfil call to stop insatiable subsidization and for a government response that acts to consider the climate change risk in valuation and incentivize relocation and buy-out packages in a process of managed retreat.
"The key, however, is for the government to listen to the science and act now to prevent Americans from being swept up in another housing crisis, this time caused by climate change," opine Oran and Panfil.