How flood-risk information affects real-estate sales

How Flood-Risk Information Affects Real-Estate Sales

A new study of “climate migration” by the First Street Foundation looks at how flood-risk information affects real-estate sales. It found that the availability of high-resolution data affects home buying, sometimes in surprising ways.

The foundation’s mission is to make climate-risk data accessible, easy to understand and actionable for individuals, governments, and industry. It estimates different types of climate risk from flooding to fire, wind, drought and more – from the state to the county, zip code and street-address levels.

First Street’s most recent study is called “Climate Abandonment Areas.” But most of the important findings have to do with flooding. First Street published the study in the journal Nature-Communications on December 18, 2023.

Cover photo from First Street Foundation Climate Abandonment Areas Study. No credit listed.

Key Findings

Among First Street’s key findings:

  • Flood risk is a house-by-house issue, not a state-by-state issue. People may still move to states with high flood risk, but increasingly they’re using flood data to avoid risky neighborhoods and properties.
  • In the U.S., 34.5% of the population and 41.9% of the housing stock have been impacted by flooding.
  • Nationally, 7.4% of census blocks are beginning to lose population because of flood risk. Within them, 3.2 million people (35.5% of the decline) moved away because of flooding between 2000 and 2020.
  • Dr. Jeremy Porter, Head of Climate Implications Research at First Street, said “the downstream implications of this are massive and impact property values, neighborhood composition, and commercial viability both positively and negatively.” 
  • As people leave to avoid flood risk, property values decline, affecting cities’ tax bases. Further, the population left behind tends to be older and poorer.
  • The study defines 9% of the census blocks in Harris County as “Climate Abandonment Areas.” It further claims Houston has passed a tipping point where more people are moving out than in, it says, because of flood risk.
  • Many areas have “pull factors” such as jobs that offset the number of people leaving. But their growth would be even higher if flood risk were lower. Said another way, areas with high flood risk grow more slowly if they grow at all.
  • Population losses are greatest among areas that flood frequently, i.e., a 5-year flood risk.
  • High-resolution information about flooding progressively reduced consideration of homes with high risk by 24.6% after 9-weeks of study.

Confusing Definitions, Frames of Reference

While this purports to be a study about how “climate change” affects “climate migration,” the numerous counter-intuitive climate-change references constantly obscure the findings.

For instance, the authors start out talking about wildfires, severe storms, flooding, drought, tropical storms and winter storms. But then they talk primarily about flooding in relation to people moving a matter of city blocks.

As a consequence, it gets confusing. “It appears that they are trying to fit a trend to the climate change agenda,” said one of the leading hydrologists in Texas.

One must read carefully to determine the frame of reference for each claim.

Good News, Bad News

The good news is that First Street data shows people seem to be paying more attention to flood risk when they purchase homes – assuming that good data is available.

The bad news is that good flood-risk data is often not available. Across our region, for instance, many areas remain unstudied. And recent data often remains unreported, i.e., in Harris County.

In the meantime, developers continue to build in floodplains. And new developments often don’t yet have listed addresses. So it’s hard to for homebuyers to estimate risk – even when using First Street’s models.

The hydrologist mentioned above felt First Street overcomplicated the issue. “This isn’t about climate change; it is about common sense. People built in places they shouldn’t have built decades ago and after enough disasters, people have had enough. They are moving. Floods have happened since the dawn of time and certainly before ‘climate change.’ Common sense tells you that people move when they have been hit hard and often enough.” 

Posted by Bob Rehak on 12/19/2023

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