NEW YORK – US homes in areas prone to floods may be currently overvalued in the range of US$121 billion to US$237 billion, according to a report published on Thursday in the journal Nature Climate Change.
The discrepancy in value was particularly significant in counties along the coasts in places where disclosure of flood risk isn’t required in real estate transactions, the study found. Although high-value homes along Florida’s Gold Coast accounted for the largest part of the absolute amount of valuation differential, low-income households stand at risk of losing the largest share of home value.
It has long been understood that flood risk is not adequately priced into homes or flood insurance. In many cases, buyers are simply not aware, since federal government maps outlining risk zones are outdated and difficult to access. Moreover, state laws vary on how much flood-disclosure risk is required when homes are sold.
First Street tried to make the risks more transparent in 2020 by publishing its own analysis of flood risk for every property in the lower 48 states.