Despite clear warnings and rising premiums, coastal home buyers ignore rising flood risks.

Apollo Beach, Florida, is a maze of canals lined with hundreds of houses perched right near the water’s edge. The whole community, just south of Tampa, is only about 3 feet above sea level, meaning it’s at risk from storm surge as sea levels rise.

Homebuyers along the U.S. coasts can check each property’s flood risk as easily as they check the size of the bedrooms – most coastal real estate listings now include future flood risk detailsClimate change is taken into consideration. Apollo Beach, for instance, has many properties that are at least 9/10 on flood risk scale.

That knowledge isn’t stopping homebuyers, though.

Waterfront homes are available Selling in a matter of daysYou can go on the market and the same story is being told All along the South Florida CoastAt a time that is scientific Reports These are the warning signsInformation about rising coastal flooding risks as the planet heats.

We are professors of urban geography American politicsFollowers of the real estate industry. To understand why people are ignoring a risk that could lead to expensive damage and eventually lower their property value, we talked to hundreds of Florida real estate agents about their clients’ motivations and concerns.

Here’s what we learned.

Nothing can force buyers to take into account long-term risk.

In late 2020, 680 licensed Florida Realtors were surveyed. Their responses suggestProspective homebuyers don’t take elevation or flood vulnerability into consideration when searching for homes. There are no detailed flood risk maps available, so they have had little to no impact.

Part of the problem may be that mortgage lenders and appraisers aren’t accounting for properties’ vulnerability to sea level rise, so homebuyers aren’t immediately feeling the risk in their pocketbooks. Wealthier buyers who don’t need a mortgage aren’t requiredFlood insurance can be purchased, and Congress has made it possible History of rolling backFlood insurance rates rise.

Buyers are not required to consider long-term risks.

However, studies clearly show how risks can lead to costs. A recent study by scientists who create flood-risk maps in Florida found that Hillsborough County (home to Tampa and Apollo Beach) is likely to see an increase in flooding. 70% IncreaseClimate change will lead to an increase in flood damage per year by 2050. That’s less than a 30-year mortgage away.

What are real estate agents hearing?

We reasoned when The survey was started in 2020If a segment of the population is avoiding flooding-prone properties, then prices should drop and demand should decline. Our Previous survey in 2018The study, which involved homeowners in coastal Florida, found that both Republicans as well as Democrats believed that rising seas would not have any effect on their home values.

To test the theory of flood risk being largely ignored in the market, we asked real-estate agents what they saw. In what ways had they seen house prices declining or not increasing as quickly for properties at danger of flooding? Forty-five percent reported “not at all.” Only 11 of the 680 agents indicated that house prices for properties at risk of flooding were “very frequently” stagnating or falling.

We also asked whether mortgage lenders had declined loan applications in flood-prone areas or increased fees for loans, in the form points or mortgage insurance. Sixty percent said, “not at all,” and only 7% said “somewhat frequently,” “very frequently” or “all the time.”

A large majority of agents (nearly 70%) said that they expect little to no impact on the market for the next five to ten years.

Here’s some of what they said.

“People are and will still buy in the coastal areas of Florida, and if they are buying, there will be no decrease in value. The retirees and soon-to be retired are the biggest buyers in the market. They have the belief that they will live long enough to avoid any adverse effects from climate change. They are buying purely on emotion, and do not consider the long-term cost. They are also buying with cash and no mortgage.”

Lenders are not motivated to decline mortgage applications from properties at risk of future sea level rise. Federal agencies that purchase conforming loans Do not requireInformation about flood risk and possible sea level rise. Flood risk would then be used to make lending decisions if these requirements were changed.

“Buyers of coastal properties are financially able to be more risk-oblivious and can afford the higher rate for insurance or be self-insured. Sea-level rise is not currently top-of-mind in our local market.”

For years, federal flood insurance has been heavily subsidised by U.S. tax dollars. The National Flood Insurance Program owes U.S. Treasury Around $20 billionFor expenses beyond the homeowner’s premiums. As of April 1, 2022 All of its flood insurance policies, new and oldThe following conditions apply: New pricing system, Risk Rating 2.0Designed to take into account risk.

But the program Members of Congress pressurize her to take actionTo ensure that rates don’t rise too fast or get too high, Buyers who purchase homes for cash, which is a large portion of South Florida’s market, are exempt from flood insurance requirements.

“Wealthy people will still be enamored by the idea of living in front of the sea, but they will probably spend a lot of money making the property more resilient to the effects of sea-level rise. This means that maybe the demand for high end properties will not weaken so much.”

Agents suggested that wealthy homeowners take the risks seriously and plan on investing in structural changes. Such as raising your home.This could help protect their homes from storm surge and sea level rise.

The market isn’t integrating long-term risks

Because of Rising sea levels and storm riskWe conclude that many of the houses being sold in South Florida today will not last their 30-year mortgages and will need to be modified or repaired. It is also likely that houses that are more vulnerable to rising sea levels will be resold. It is becoming more difficult.

Florida policymakers have, to date, either ignored the risk or taken limited measures to fix weaknesses, sometimes increasing the risks elsewhere. For example, Sea wallsThey can be erected to alter the sand washing in, increasing erosion in nearby areas.

Many people believe “the market” will take care of this issue: that homebuyers, recognizing the looming risks, will discount prices on vulnerable properties, eventually reducing their attractiveness and value. We heard from Florida realty agents that this assumption is not true.