If a flood causes “substantial damage,” the cost of repairs is 50% or more of the property’s market value and a rebuild must follow local NFIP flood standards.

Source: What Does Flood Insurance ‘Substantial Damage’ Mean?

What Does Flood Insurance ‘Substantial Damage’ Mean?

Climate Change and Real Estate: It’s Attitudes More than Science

A study looked at the impact of rising seas on real estate prices and found residents’ beliefs a contributing factor. If a city’s population generally believes in climate change, housing values in higher-risk areas suffer some – but values aren’t affected as much if residents don’t.

MIAMI – Cities from New York to Miami and from New Orleans to Los Angeles are feeling the impact of climate change – and in some areas, rising water levels, heat waves, droughts and fire risk are putting a serious dent in real estate values.

But what happens in locales where a significant proportion of people don’t believe in climate change?

According to a new study from the UBC Sauder School of Business, buyers could end up paying significantly more for a home.

Nearly 65% of people in the U.S. own homes, and on average, those homes represent 40% of their assets – as well as a major source of household debt.

At the same time, some climate experts predict that approximately 2% of U.S. homes – worth $882 billion – are at risk of being underwater by 2100; in low-lying coastal regions such as Florida and Hawaii, between 10 and 12% of homes could be inundated.

For the large-scale study, researchers combined sea level data from the National Oceanic and Atmospheric Administration (NOAA), geographic data about climate change attitudes from the Yale Program on Climate Change, and proprietary data on millions of repeat real estate transactions from Zillow to examine patterns in high-risk areas.

They found that, even after taking myriad variables into account, homes projected to be under water located in climate change “denier” neighborhoods sell for roughly 7% more than homes in “believer” neighborhoods.

“If everyone were to say, ‘I’m not buying beachfront property here because it’s going to get flooded,’ then prices would collapse. But if you don’t believe in climate change, you might say, ‘You guys are crazy. Climate change isn’t a real thing, so I see a buying opportunity,’” explains UBC Sauder School of Business assistant professor and study co-author Markus Baldauf.

Because so many people live close to coastlines, adds Baldauf, the effects are amplified.

“If you wanted to create a society that’s really susceptible to climate change,” he says, “you would arrange it like they have in the U.S., because the population centers are really close to the water.”

The study did not examine the effect in other countries, but Baldauf expects it wouldn’t exist in Canada or Europe because belief in climate change is much more ubiquitous in those areas. Within the United States, however, the differences are significant; for example, in California, the effect is much less, likely because there is more agreement on climate change, whereas in Florida the gap is substantial, even though climate change risks in the waterfront-heavy state are especially high.

The researchers also examined political party affiliations, and while right-leaning communities were heavier on climate deniers, the effect still occurred even when accounting for political differences.

Of course, calculating risk has always played a part in real estate, but historically, banks, Realtors, investors and homeowners typically looked at past occurrences of things like fires and floods to price in future pitfalls. But because of the growing effects of climate change, past events no longer provide an accurate sense of what is likely to happen in the future, and predictions rely more heavily on future-focused climate science.

Baldauf emphasizes that when it comes to climate change and real estate pricing, the thing that nobody can accurately predict is who is right.

“Which price is the appropriate one? We don’t know. Based on the data, all we can say is there’s disagreement, but it could be that the deniers are right, or it could be that the believers are right. Or it could be that they’re both wrong,” says Baldauf. “All our study says is that they can’t all be right.”

Copyright © 2019 NewsRx LLC, Climate Change Daily News

A study looked at the impact of rising seas on real estate prices and found residents’ beliefs a contributing factor. If a city’s population generally believes in climate change, housing values in higher-risk areas suffer some – but values aren’t affected as much if residents don’t.

Source: Climate Change and Real Estate: It’s Attitudes More than Science

Look at your home on the SLOSH models.  If it shows you in a flood prone area in Florida due to storm surge then I would get ready for a premium increase.

I copied this from the NFIP Site

1. What data sources is FEMA using for this initiative? Where are the data coming from?

FEMA is using a combination of models to support the development of rates. We are pairing state-of-the-art industry technology (e.g. catastrophe [CAT] models) with the NFIP’s mapping data to establish a new risk-informed rating plan. Combined data from CAT models and NFIP mapping data will provide a better and more comprehensive understanding of risk at both the national and local level.

FEMA is using data from multiple sources, such as:

• FEMA: Existing mapping data, NFIP policy and claims data;
• Other Federal Government Agencies: U.S. Geological Survey (USGS) publicly-available data;
• National Oceanic and Atmospheric Administration (NOAA) Sea, Lake, and Overhead Surges from Hurricanes (SLOSH) data;
• U.S. Army Corps of Engineers (USACE) data sets; and
• Third-party sources: Commercially-available structural and replacement cost data and catastrophe flood models.

 

 

 

“Risk Rating 2.0” now goes into effect Oct. 1, 2021. Rather than rely heavily on flood zones to determine policy premiums, Risk Rating 2.0 will consider more variables and charge premiums that vary by home.

Source: FEMA Postpones Flood Insurance Changes for One Year