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Climate change could mean homes are overvalued by $121B-$237B

Properties subject to flood risk don’t exhibit the market pricing discounts they might be expected to have.

By Erik Sherman | February 23, 2023 at 12:05 AM
Common household items are shown amongst standing water in a flooded house. The paper pointed to evidence that a 4.6% pricing discount for properties in the hundred-year flood zone is not enough to reflect expected flooding costs. (Credit: Zastolskiy Victor/Shutterstock.com)

Climate change is a threat to many real estate properties, though more often honored in the speech while handled in the breech. Three-quarters of flood risks remain uninsured while real estate sites regularly fall short on disaster and wildfire risk ratings.

A new study in the journal Nature Climate Change says that the biggest gap may be in pricing. Researchers from the Environmental Defense Fund, Resources for the Future, Boston University, Dartmouth College, City University of New York, and the Federal Reserve documented a likely profound misperception in US housing markets. Climate change, they say, has gone largely unpriced.

 

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