Flooding is a major cause of concern to people living and working in US coastal towns. In fact, the Union of Concerned Scientists (UCS) predict in its latest report that 300,000 homes are at risk over the next 30 years and that nearly 2.4M homes are at risk by the end of this century.
In the state of Florida, more than 10% of its residential properties or +1M homes are at risk due to flooding by the end of this century. Such home loss translates into losses of +$5B in annual property tax receipts.
New Jersey and New York, both walloped by Hurricane Sandy, stand at risk of losing 250,000 and 143,000 homes, respectively, due to flooding.
Rachael Cleetus, economist and policy director for the Climate and Energy Program under the umbrella of the UCS said, “What’s most striking as we look along our coasts is that the significant risks of sea level rise to properties identified in our study often aren’t reflected in current home values in coastal real estate markets. Unfortunately, years ahead may coastal communities will face declining property values as risk perceptions catch up with reality.”
According to the UCS report, communities located in Louisiana, Maryland, New Jersey and North Carolina could be the hardest hit by flooding and subsequent losses of property tax revenue. African American and Hispanic population groups located in California, Florida, New York, New Jersey, South Carolina and Texas could face greater hardships due to the combination of sea level rise, flooding, and longstanding social and economic inequities that prevent “speedy recoveries” from chronic flooding. Homeowners who face chronic flooding could also be facing underwater mortgage defaults as well.
Obviously, underwater homes and underwater mortgages translate into “underwater” tax revenues that fund schools, roads and emergency services. Just as obviously, underwater homes and underwater mortgages translate into underwater small and large lenders. The cycle is vicious.
Neither renters nor more affluent homeowners are left unscathed in this cycle. Those homeowners would become more responsible for supporting essential city/county/state services and infrastructure needs, thus losing more of what they own and their wealth. Renters may become squeezed into even tighter rental markets as more homeowners are forced to rent if/when they lose their homes. Plus, renters may have to put up with decaying buildings and increased “nuisance” flooding.
This latest report by the Union of Concerned Scientists is quite clear in its conclusion that “…now, sea level risks are different from what they were in the past. Before, flooding and sea level rising in coastal properties crashed the values of coastal properties. Then, those values recovered. Now, those coastal property values are not going to recover.”
The time to target policy improvements and market drivers of risky coastal development is now.