The potential for widespread flooding is high, but even after major storms like Hurricane Harvey in 2017, some homeowners in high-risk areas still do not have flood insurance. That’s because today’s federal flood maps, which guide insurance demand, are backward-looking and don’t factor in the effects of climate change. Starting this week, however, every homeowner and potential homebuyer in America will be able to see a new, forward-looking analysis of their property’s flood risk. That could have a huge impact on the national housing market.
Hurricane Harvey inundated the Houston area three years ago, most of the homes damaged or destroyed had no flood insurance because they were not in FEMA-designated flood zones, according to the National Flood Insurance Program. FEMA flood maps are often outdated, not comprehensive and don’t factor in the effects of climate change. While FEMA classifies nearly 9 million U.S. properties as having substantial risk, requiring them to carry federal flood insurance, First Street identifies nearly 70% more, or more than 14.5 million properties, with the same level of risk. It calculated that more than half the properties in Harvey’s path were at high flood risk and should have had insurance.
The new flood scores may lower the value of certain homes. The higher the flood risk is, the more it costs to insure the home, which then detracts from its value. Homes with higher flood risk may also not sell as quickly as others with lower risk in nearby areas.