Tag Archive for: First Street Foundation

Climate-Related Risks Could Reduce Real Estate Values by $1.4 Trillion in Next 30 Years

2/4/25 – First Street Foundation released a new study today as part of its 12th National Risk Assessment. “Property Prices in Peril” estimates that real estate values could lose $1.4 trillion over the next 30 years due to climate-related risks. That number is unadjusted for inflation.

First Street specializes in climate risk financial modeling. Its clients include financial institutions, companies and governments. The organization announced the research in a webinar this morning. I will summarize it below.

Summary of Research

The basic premise: Homeownership has long been the primary pathway to wealth creation in the U.S. Prospective homeowners decide where to live by balancing quality of life and cost of living. That drives home value increases and decreases.

Crucial Role of Insurance Costs

But climate change is now causing many to recalibrate that value proposition as insurance costs now represent a higher proportion of mortgage costs than ever before. And First Street predicts premiums will continue to rise until they become actuarily sound.

Projected insurance increases

The First Street presentation began with several slides on insurance rates and factors affecting them (losses, predicted risk increases, government regs, etc.). In some areas, monthly insurance payments could soon comprise 25% of total home payments. First Street predicts that…

Huge increases in insurance premiums will drive up the cost of home ownership and make homes in risky areas less affordable for many.

In addition, money paid out to insurance companies does not appreciate like the home itself does. As a consequence, a lower percentage of a family’s total income will be available to build wealth from home ownership in the future.

Diagram showing main influences of flooding on property value
Diagram showing how climate change and insurance rates affect home values and demand
Secondary Impacts

Further, the authors found that “The implications for local economies extend far beyond direct housing market effects to regional GDP, household financial stability, and public services.”

“Communities facing declining property values due to climate risks confront multiple economic threats,” says First Street. “Falling home equity reduces household wealth and borrowing capacity, constraining consumer spending and local economic activity.”

“Lower property assessments significantly impact state and local government revenues, with property taxes accounting for over 30% of local government funding nationwide. This reduction in revenue can trigger a vicious cycle, where limited funds hinder investments in critical climate adaptation infrastructure just when it is most urgently needed— further exacerbating the decline in property values.”

“States like Texas and Florida, which rely heavily on property taxes due to their no-income-tax structure, are increasingly exposed to fiscal risks as climate change threatens their tax base by impacting property values.” 

Flooding Most Widespread Risk

“Flooding will emerge as the most geographically widespread driver of climate migration, leading 11.9 million Americans to relocate by 2055,” says the study.

“This migration pattern affects every region of the U.S., from coastal communities facing sea level rise and storm surge to inland areas facing fluvial flooding from rivers and streams to urban areas subject to pluvial flooding from heavy rainfall events,”

First Street projections indicate that “over one-third of U.S. counties and more than half the population are exposed to frequent, chronic flooding from precipitation alone.”

Effects of Climate Migration Most Apparent in Small Areas

Instead of looking at national and state trends, the First Street study looked at every census tract in the county. It found that housing choices at that micro-economic level are increasingly being driven by awareness of climate risks such as flooding.

Five Market Segments Illuminate Different Climate-Migration Patterns

Looking forward, First Street modeling segments neighborhoods into five categories:

  • Climate Abandonment – 26% of neighborhoods/census tracts, show sustained population loss due to climate change.
  • Risky Growth – 31% of neighborhoods continued to grow despite high risk, suggesting other strong economic or social drivers.
  • Tipping Point – 27% of neighborhoods show initial growth followed by decline as rising insurance premiums and climate impacts reach unsustainable levels.
  • Economic Decline – 11% of neighborhoods lose population despite low risk and stable insurance rates, suggesting economic factors, not climate, are driving decline.
  • Climate Resilient – 5% of neighborhoods attract population growth with low risk and stable insurance rates.

The study found five counties in Texas fell into the “risky growth” category: Fort Bend, Denton, Williamson, Travis and Montgomery.

For More Information

To learn more, visit the First Street Foundation website where you will find links to:

Rehak’s Take

All in all, the authors made an excellent case for “climate caution.” That in itself could affect migration and home prices.

But the study did not address many of the factors that have made Texas one of the fastest growing states in the country, despite the fact that more people live in Texas floodplains than live in 30 states.

For instance, the study did not take into account immigration or variation in tax rates compared to other states.

I’m also a bit skeptical of any study that tries to project current trends 30 years into the future. Fifty years dealing with market research taught me how quickly trends can change.

Despite those concerns, the study makes excellent reading. It also makes a valuable contribution to our understanding of flooding and how it could impact the future of the Houston region.

Posted by Bob Rehak on 2/4/25

2716 Days since Hurricane Harvey

Do You Know Your Home’s True Flood Risk?

11/18/24 – Do you know your home’s true flood risk? In October, National Geographic ran an insightful article by Meryl Davids Landau titled “Many Americans are buying homes in flood zones – and don’t realize it.”

The article begins, “The Flood Insurance Rate Maps (FIRMs) used by FEMA are based on antiquated data and obsolete models.”

Harvey evacuation. Sally Geiss
Kingwood Town Center during Harvey

Flood Maps Fail to Predict True Flood Risk

Landau then examines a number of storms and locations where FEMA rate maps failed to predict flood damage. She says, “The FIRM maps have extensive problems” from the data they include and exclude “to the limited assumptions around how the maps would be used.”

She quotes Susan Crawford, a senior fellow for sustainability and climate at the Carnegie Endowment for International Peace, as saying “millions of homes should be labeled as high flood risks but aren’t.”

Beyond Climate Change

Landau’s analysis of flood risk goes far beyond climate change – the usual bogeyman.

She tracks the history of FIRMs back to the 1960s and their original objective: to encourage home ownership. Landau examines the data that FIRMs are based on and their built-in sampling bias. She says the location of flood gages near major rivers was expedient at the time. However, basing flood maps on those locations ignores flooding from other sources. Those sources include:

  • Smaller waterways such as streams, creeks and tributaries
  • New residential and commercial development
  • Growth of impervious surfaces
  • Insufficient drainage infrastructure and mitigation

I touched on all these sources and more in a post titled “Why Do We Flood?”

Landau also touches on political pushback. She told a poignant story about a community that fought new flood risk maps because political leaders feared it would reduce the tax base. Because of this and other complexities that many people remain unaware of, they buy homes without understanding their true flood risk.

Sources Indicate 3X More Homes at Risk than FEMA Shows

Landau quotes Sam Brody, a professor at Texas A&M, who is developing a different approach to modeling with the Texas Division of Emergency Management.

Rather than focus on historical flooding, Brody incorporates these other factors in his models.

High flood risk areas flagged by the Texas system are termed “damage plains rather than flood plains, and they extend for many miles beyond FEMA’s hazard zones,” says Landau. “In fact, the new model determined that three times more structures in the Texas Gulf Coast are actually at high risk of getting inundated.”

So what’s a prospective home buyer to do? Check a variety of sources, starting with FEMA. If you’re going to bet your life savings on a new home, check a variety of sources:

Flood Risk Reports on My House Varied Radically

When I checked my address, I found radically different estimates of my flood risk.

  • FEMA showed me far outside of the 500-year floodplain
  • First Street showed me outside of the danger zone, but not quite as far away. It said I had “mild” flood risk.
  • Buyers Aware rated my flood risk as “moderate high.”
Carolanne Norris took this shot as she and her family hiked to safety on Valley Manor. Shot is looking back down Woods Estates. Kings Forest Pool is on right.
Flooding three blocks past Kingwood Drive during Harvey, more than 2 miles from the San Jacinto West Fork

Buyers Aware said, “…based on the flood risk variables outlined below, our analysis ranks this site as having a moderate-high flood risk. This is near the top of the highest risk categories included in our model. We strongly encourage you to purchase flood insurance and explore other actions to mitigate your flood risk.”

While this property may not be in the FEMA regulatory floodplain (sometimes referred to as the “100-year floodplain”) our analysis indicates that flood risks may be higher than what is currently measured by the regulatory maps.”

In the National Geographic article, Landau says, “Since the 1990s, over 50% of flood loss in Texas has occurred in areas outside of SFHAs [FEMA’s Special Flood-Hazard Areas].”

Buyers Aware factors in:

  • Land elevation
  • Distance to coastline
  • Distance to streams
  • Imperviousness
  • Soil Characteristrics
  • Height above nearest drainage

Buyers Aware also showed me a map of the neighborhood and told me that within the area shown, “$22,813,736 of flood insurance claims have been paid in the last 10 years.”

That total reflected only properties with active NFIP policies in place. I know people nearby who had five- and six-figure damage during Harvey. But they didn’t have flood insurance policies because they thought they were beyond the 500-year flood zone.

Other Interesting Data that “Buyers Aware” Includes

Buyers Aware also told me that FEMA has 3890 active NFIP policies in my area.

Next they informed me about a 7% increase in impervious surface upstream from me.

Buyers Aware also recommended I buy flood insurance and told me where I could find more information about it. They also listed several flood mitigation strategies such as:

  • Improving drainage
  • Retrofitting
  • Flood barriers
  • Property elevation

For the Record

For the record, I live 2.1 miles from the San Jacinto West Fork. During Harvey, floodwaters stopped at our driveway. And that’s the main reason I write about flooding in my retirement.

Also for the record, FEMA has set a goal to update all of its FIRMS every ten years and to include climate change in the analysis.

Finally, Harris County Flood Control District’s MAAPnext effort (not yet fully vetted by FEMA) addresses many of the issues addressed by National Geographic and Landau.

But local pushback will always be a problem everywhere. Montgomery County announced an ambitious effort to update its drainage criteria manual after Harvey, but has yet to officially adopt the changes it considered.

Posted by Bob Rehak on 11/18/24

2638 Days since Hurricane Harvey



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

2303 Days since Hurricane Harvey

New Data Suggests Houston’s Expected 100-Year Flood Is More Likely to Happen Every 8 to 23 Years

First Street Foundation, a non-profit risk-research group, estimates (based on what it says are “well known” Atlas-14 flaws) that a so-called 100-year flood event in Houston could likely happen every 8 to 23 years.

NOAA’s Atlas 14, a massive, years-long effort, which hasn’t even been fully implemented yet, may already be seriously out of date according to First Street.

As a result, First Street claims the design standards for infrastructure projects based on erroneous Atlas-14 data are likely to fail. Trillions of infrastructure investment dollars hang in the balance.

NOAA Replacing Atlas 14 with Atlas 15 Already

NOAA expects to release its latest Atlas-15 rainfall probability statistics for the U.S. sometime in 2027. Like Atlas 14 below, they will contain probabilities for every location in the country – for durations ranging from 5 minutes to 60 days and recurrence intervals from 1 year to 1000 years.

atlas 14 rainfall probabilities
Atlas 14 Probabilities for the North Houston area.

Moreover, for the first time ever, Atlas-15 probabilities will come in two flavors: with and without estimates for the impact of climate change.

First Street Foundation, a non-profit research and technology group, specializes in environmental risk assessment. They position their system, RiskFactor.com, as a stopgap until NOAA releases Atlas 15.

Time Lags Cause Confusion, Create Danger

FEMA still has not released flood maps based on the Atlas-14 probabilities above. The MAAPNext Group within Harris County Flood Control District has been working on those since Harvey. MAAPNext’s latest timeline (below) shows that FEMA may not make Atlas-14-based flood maps official for another 3+ years.

Engineers and government officials use this data when designing new subdivisions, industrial facilities, bridges, highways and other infrastructure.

For instance, they need to know, how high the bridge must be to let water flow under it during a flood to avoid catastrophes like the one below.

I-69 repairs
Old data led TxDoT to inadequately design the I-69 bridge over the San Jacinto West Fork. Repairs took more than a year after Harvey to complete while residents endured massive traffic jams.

Atlas 15 Underway Before Atlas 14 Implemented

A copyrighted article in the New York Times this morning by Raymond Zhong was titled “Intensifying Rains Pose Hidden Flood Risks Across the U.S.” In it, Mr. Zhong claims that new calculations show hazardous storms can dump significantly more water than previously believed.

“One in nine residents of the lower 48 states, largely in populous regions including the Mid-Atlantic and the Texas Gulf Coast, is at significant risk of downpours that deliver at least 50 percent more rain per hour than local pipes, channels and culverts might be designed to drain,” says Zhong.

Compounding the problem, “NOAA’s estimates are ‘the floor, not a ceiling,'” said Zhong, quoting Abdullah Hasan, a White House spokesman.

“That means millions of homeowners might be making decisions with an incomplete understanding of the true physical and financial risks they face,” said Zhong.

145,000 Houston Homes and Billions in Infrastructure Caught in Time Lag

Zhong quoted First Street Foundation, which said that in Houston alone, as many as 145,000 homes may be in the 100-year flood zone, but that they are not shown that way in current FEMA flood maps.

To put Atlas 15 and its climate change corrections into perspective…

First Street estimates that in Houston, what we currently think of as a 100-year flood may actually be an 8- to 23-year flood.

First Street Foundation Press Release

All this comes as the nation gears up to spend more than $1.2 trillion dollars on infrastructure which Congress and President Biden approved in 2021.

And that $1.2 trillion doesn’t even include the money homebuyers spend each year. About 30% of all household income in the U.S. goes toward housing. And the average American moves once every seven years.

That means virtually everyone is likely not making home-buying decisions based on the most current (accurate) flood probabilities. By the time FEMA releases Harvey-based Atlas-14 flood maps, Atlas-15 revisions will already be available to a select few.

While the Association of State Flood Plain Managers finds First Street data useful, it emailed a report at the close of business today about First Street. The report says that “ASFPM has and will continue to support NOAA’s work on Atlas 14 and 15, which will remain the gold standard within our profession.”

Problems Caused By Lack of Timely Updates

The vast majority of developers, homebuilders and engineers are ethical. But some less scrupulous developers can exploit confusion caused by irregular update policies.

Likewise, engineers who designed a bridge to one set of specs, may find their work out-dated before construction starts. What are the ethical obligations in a case like that?

Just this year, we’ve seen numerous instances of developers trying to get their plans grandfathered under pre-Atlas-14 regulations even as the U.S. moves toward Atlas 15. Little wonder that when a flood happens, few can explain where the system went wrong.

“The fact that the Nation will not have the most accurate estimates of extreme precipitation likelihoods available at the time of the design of these projects means that many of them will be out of date on the day they are opened to the public,” said Matthew Eby, Founder and Executive Director of First Street Foundation.

Governments at all levels need to work better together to shorten the data supply chain. Doing so could save Americans trillions of dollars.

Posted by Bob Rehak on 6/26/2023

2127 Days since Hurricane Harvey

The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.