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UCLA Anderson Forecast
The effects of climate change pose a risk to the stability of the housing market in the United States. There is growing concern that increasing costs of flooding are not fully captured in property values. In this episode of Anderson Forecast Direct podcast, Jesse Gourevitch from the Economics Team at the Environmental Defense Fund joined us to talk about their recent paper on quantifying the magnitude of unpriced flood risk in the US housing market.
Top Takeaways
1. Depending on the discount rate, residential properties exposed to flood risk are overvalued by $121-237 billion.
2. Geographic hotspots for highly overvalued properties are in counties along the coast with less information about climate risk.
3. Potential consequences for homeowners and local government:
4. The pricing of National Flood Insurance Program (NFIP) premiums and mortgage lenders can play an important role in greater capitalization of flood risk into home values.