Florida is experiencing fear - fear of climate change and sea level rise - that is damaging property values - and Houston is watching.
February 6, 2018 / / —
“Coastal residents of Florida are experiencing a rising sea level and they have seen the results,” comments Raymond Campbell of Houston Home Buyers, “and it affects home sellers and home buyers alike. They are all afraid of the next flood.”
“Houston has other problems. In addition to covering large areas of land with concrete and asphalt, we have experienced subsidence. Because of the excessive pumping of water from underground in the past, Houston has had dramatic lowering of land levels in some areas,” stated Mr. Campbell.
The U.S. Geological Survey estimated 4700 square miles of land of southeast Houston dropped by 6 inches, and possibly more, due to subsidence. At the extreme, some land near the Houston Ship Channel sank around 9 feet. The Brownwood subdivision, located in Baytown, literally began sinking into Galveston bay in the 60s and 70s. After Hurricane Alicia hit the area in 1983 FEMA declared Brownwood unfit for human habitation.
Hurricane Irma hit Florida in September 2017 and demonstrated the damage from higher sea levels. Homes and commercial buildings were damaged by huge volumes of water that were pushed onshore. In addition to “normal” water damage inside a home, the hurricane’s water penetrated seams in buildings, destroyed generators, rendered elevators useless, and left a trail of destruction everywhere.
Florida home owners who are trying to sell are seeing the effects of Hurricane Irma on potential home buyers. Some home sellers have reduced their home prices by 30% and still have no offers. The publicity is everywhere, not only about the recent hurricane, but also about parts of Miami that are regularly under water during high tide. Zillow Group recently estimated that 500,000 homes in Miami will be located in standing water (under water) by the year 2100.
Other studies have described the risk of sea-level rise on both coasts of Florida. The credibility of these studies contributes to the discounts currently being offered by those who are home sellers.
Many potential buyers fear that federal flood maps are outdated and inaccurate and thereby understate the risk of flooding. Adding to this fear is the fact that many potential buyers feel that real estate developers and agents have failed to disclose flood risks. Some of the real estate critics in Florida have described this lack of flood risk disclosure as “systemic fraudulent nondisclosure.” And critics in Houston are echoing similar arguments.
Many potential Florida home buyers also fear the cost and inconvenience of decades of future flood control construction. Roads will have to be elevated, water retention reservoirs built, storm water drains installed, and other construction designed to keep the water at bay. Houston residents are facing a similar situation.
And finally, potential home buyers are faced with the financial realities. Flood insurance will also certainly be far more expensive in the future. Property taxes will have to rise to pay for common infrastructure improvements. And lenders will ask for higher interest rates to compensate for the higher risk of flood and water damage.
Florida’s water and flood problems are not the same as those on the Texas Gulf Coast, but they are similar enough to cause real concern in the real estate market. Today the demand for residential housing in Houston seems to be stronger than the fear of future flooding. But if a fourth consecutive year of 500 year flooding hits Houston in 2018 then the real estate market will likely experience massive depreciation. Any large scale flooding in the next several years would be catastrophic for Houston homeowners.
Release ID: 297506