The torrential downpour Houston saw last week left the fourth largest city in America with billions of dollars in damages. The resulting floods claimed the lives of eight human beings, and an unknown or otherwise unreported number of pets and animals.
After the news stories stopped fawning over the destruction, the questions began to mount: What could be done to prevent this type of disaster? And, unfortunately, the answer is nothing.
But then it raised the fringe questions about FEMA, flood insurance policies, and how other areas of the country potentially affected by disasters such as this can be proactive in their efforts.
“Currently, under federal law, flood insurance is mandatory for all federal or federally-related financial assistance for the acquisition and/or construction of buildings in Special Flood Hazard Areas (SFHAs),” said Sean Becketti, chief economist at Freddie Mac.
“In addition, Freddie Mac requires flood insurance before it will purchase a loan for a property in an SFHA.”
Climate change and its impact on the housing market
Becketti also talked about the unknown foreseeable risks of climate change and the effects it will have on the housing market. He rhetorically commented about houses on the coast, say, a beachfront in Miami, and its current value.
“Will the value of the house decline gradually as the expected life of the house becomes shorter?” he asked in the press release.
“Or, alternatively, will the value of the house — and all the houses around it — plunge the first time a lender refuses to make a mortgage on a nearby house or an insurer refuses to issue a homeowner’s policy?”
Freddie Mac released its monthly Insight report last week talking about this very topic. In it, Miami is referenced due its alarming rise in sea-level compared to the global average. The report also showed that Miami has already spent around $100 million on proactive flood control.
FEMA offers maps to find out if your address is in a SFHA.
Some other points the report pointed out related to areas not in SFHAs. The impact from floods does have a direct impact on beachfront and coastal properties, but it’s important to also look at how the community is affected. Job losses, relocation, and rebuild time all have a powerful economic impact on the surrounding communities.
And if it’s not startling enough that you don’t even need to be a coastal resident to experiment flooding, the Insight also shared some information from The Risky Business Project. The RBP is co-chaired by Michael Bloomberg, Henry Paulson and Thomas Steyer.
In the climate risk assessment the RBP conducted, the group estimates that somewhere between $66 billion and $160 billion in real estate will be underwater by 2050. That number jumps to between $238 billion and $507 billion by the end of the century.
