U.S. homes in areas prone to floods may be currently overvalued in the range of $121 billion to $237 billion, according to a report published Thursday in the journal Nature Climate Change.
Roughly, that number is derived by looking at how much homes are selling for now and subtracting the estimated average annual losses that they will incur from flooding over the next 30 years (the average length of a mortgage in the U.S.), as determined by the First Street Foundation, a nonprofit that seeks to improve awareness of climate change-related risks like increased flooding. The report was authored by researchers from First Street, the Environmental Defense Fund and Resources for the Future, among others.
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.
