(Bloomberg Opinion) — Sea level rise is on track to cause extreme devastating flooding in the U.S. by fivefold by 2050, but a new study of home prices in coastal Florida suggests that buyers are either uninformed or indifferent to the risk . Governments need to take action to ensure that everyone is properly informed about this critical threat.
Freddie Mac researchers led by Ajita Atreya found that homes that are directly exposed to sea level rise have no exemptions over homes that are not. There were exemptions for homes in specified floodplains, but they probably should have been financed with government-backed mortgages rather than sea-level exposure in the future to offset the cost of flood insurance. The findings hold true for investment properties other than those purchased as primary housing.
Overall, the market’s willingness to look past sea level exposure equates to an alarming oversight. According to the National Oceanic and Atmospheric Administration, about 40% of the U.S. population lives in coastal counties, and NOAA researchers now forecast an average of 10 to 12 inches of sea level rise by 2050, even as the world cuts greenhouse gas emissions. manage to do. emissions before.
Yet many buyers clearly lack important information. Florida and many other states also do not require sellers to disclose past flooding, let alone buyers that a home faces the risk of increased seafloor. In a ranking by the Natural Resources Defense Council website, Florida is among 21 states that receive an “F” in flood disclosure, meaning there is no statutory or regulatory requirement for flood disclosure at the time of sale. According to Michael Gerrard, director of the Sabin Center for Climate Change Law at Columbia Law School, states that require disclosure often come in at the 11th hour, when buyers are signing a stack of closing documents. Renters generally get less protection than buyers.
As the Freddie Mac study showed, insurance premiums influence behavior: buyers discount property values in designated flood zones. Unfortunately, the government’s flood zones still do not consider the future effects of sea level rise. NRDC’s water and climate advocate, Joel Skata, told me, “not having forward-looking flood maps” is like just driving a car in your rearview mirror. Clearly, politicians and their constituents often fight flood-plain designations over concerns that they will reduce the value of properties in their area. Government leaders in vulnerable states and municipalities should instead take a longer view: Accurate, forward-looking maps will encourage needed mitigation efforts.
Clearly, there have been some positive developments on addressing the so-called information asymmetries in flood risk for real estate. Realtor.com and Redfin Corp. It has teamed up with the non-profit First Street Foundation to provide flood risk ratings for properties on their websites, and First Street founder Matthew Abbey said he would like to expand the resource to more government entities. “We’re just trying to get people the information so that everyone is on the same playing field,” he told me over the phone on Thursday. Meanwhile, Hawaii is set to become the first state to require ocean surge disclosures, effective May 1. Others should also follow this.
Of course, disclosure laws aren’t the only solution to the world’s climate problems. “It’s a very low-hanging fruit, and yes it’s important,” Abigail Fleming, an environmental justice advocate and University of Miami School of Law professor, told me this week. As he pointed out, the flood exposure could adversely affect housing prices for low- and middle-income households, some of whom are not by choice in vulnerable areas, but because they have no other choice. The disclosure requirements in climate action plans should therefore be combined with mitigation efforts, voluntary home purchases in vulnerable areas, rehabilitation assistance and general education on flood risk that reach people before they can buy or rent a home.
Still, some segments of the housing market are likely to ignore the reality. As a Florida resident, I’ve seen firsthand how many home buyers have concluded (correctly or not) that their investment horizon is so short that sea level rise doesn’t matter. It is also possible that near-term supply-demand dynamics heavily analyze the sector’s long-term prospects. Like other parts of the Sun Belt, Florida is experiencing an influx of new arrivals year-round in search of warm weather, nice beaches, and a vibrant culture. The real estate taxes they pay may eventually help communities adapt to the challenge of sea level rise, but it’s important first that everyone accepts the size and scope of the problem – and that includes the housing market. also includes.
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Jonathan Levine [email protected]
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