properties at risk in new analysis

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properties at risk under FEMA maps

Mapping America’s Underwater Real Estate

What happens to home prices if flood maps start measuring climate change? Millions of Americans are about to find out.

By Leslie Kaufman, Mira Rojanasakul, Hayley Warren, Jason Kao, Brittany Harris and Prashant Gopal

June 29, 2020, 5:00 AM EDT

Millions of Americans just woke up in a flood zone that had never before been listed on U.S. government maps.

The first-ever public evaluation of flood risk for every property in the 48 contiguous states has found that federal maps underestimate the number of homes and businesses in significant danger by 67%. The new flood-risk data, released Monday by the research and technology nonprofit First Street Foundation, is a virtually unprecedented disclosure of how much damage climate change can be expected to inflict at the level of individual homes.

Look up the Flood Factor score for your home and any other property in the database.

Under the new model, an additional 6 million properties are in jeopardy of flooding compared to government estimates, bringing the total to at least 14.6 million.

The vast majority of counties saw an increase on a percentage-point basis. One in 10 American properties are at significant risk of flooding right now.

Parts of Appalachia, far from the oceans, turn out to be at higher-than-expected flood risk under First Street’s detailed approach to mapping.

And climate change will continue to increase the population living in vulnerable, flood-prone areas. The new model predicts that between 2020 and 2050, under warming atmospheric conditions, the number of at-risk properties will grow by another 11%, or 1.6 million.

While flooding risk is likely to grow in almost every state, and often in places far from the oceans, over time it will be particularly devastating along the coasts in Louisiana, Delaware and New Jersey.

First Street’s model gives homeowners access to risk-analysis techniques that had previously been available to insurers and financiers. (Look up your address here.) Until now public information on flood vulnerability in the U.S. relied heavily on maps produced by the Federal Emergency Management Agency, which are often out of date, incomplete, and difficult to understand. First Street aims to change this by eventually making its flood information available on Realtor.com, the second largest listing website—a risk-disclosure event that could have profound repercussions on property values, bank loans and municipal bonds.

There are 142 million properties in First Street’s public database, and each one is scored on a 10-point scale based on the likelihood of flooding over a typical 30-year mortgage. The score, called Flood Factor, rates the likelihood of flooding in simple terms. (A Realtor.com spokeswoman said the new flood-risk scores, which had been slated to be introduced on the website Monday, would be added to listings after a technical issue is resolved.)

First Street and FEMA use the same definition of “significant risk": at least a 1% chance or greater each year that a property will experience a once-in-a-century flood. Over the course of a 30-years mortgage, if the risk remains at 1% annually, a property would have a greater than 26% chance of facing that 100-year flood. Several million more properties face moderate risk of flooding.

Flood Risk Projections

Percentage of properties at 1% risk of significant flooding each year

Source: First Street Foundation

It’s anyone’s guess how this new transparency will affect real-estate prices. When FEMA marks an area at significant risk of flooding, residents with mortgages are forced to buy flood insurance. First Street’s maps come with none of that regulatory weight, leaving buyers and sellers free to ignore them.

Academics and regulators think clear signals about expanded flood risk could be transformational. “We are already seeing real-estate values go down in some of the Southeastern coastal communities where flooding is a common nuisance. And First Street’s work is likely to accelerate that,” says Jesse Keenan, a professor of real estate at Tulane University who tracks the impact of climate change. “I think it could be a self-fulling prophecy.”

The bureaucrat who ran FEMA’s National Flood Insurance Program until 2018 agrees: “If they can pull it off and they really have the goods on every property, it could be a game changer,” says Roy E. Wright, now president and chief executive of the Insurance Institute for Business and Home Safety.

Source: First Street Foundation, Federal Emergency Management Agency, Microsoft

In the last decade, U.S. floods have caused over $155 billion in property damage and account for the majority of federally declared disasters. Ninety-eight percent of counties across the U.S. have experienced a flooding event, and FEMA rates floodwaters above all other natural disasters in damage potential.

Yet the primary purpose of FEMA’s flood maps isn’t to inform individual homeowners. The agency’s mission is to outline zones of significant risk of once-in-a-century floods for community management and insurance purposes. “FEMA’s maps are notably different in their intended use and design,” an agency spokesperson said in a statement about First Street’s project. Data needed to make decisions about “floodplain management or life and safety during a flooding event” is different from what’s needed to “inform someone’s decision to acquire [private] flood insurance or take an action to reduce their individual flood risk.”

Since First Street’s definition of significant risk is the same 100-year flood used by FEMA, the big difference in outlook comes down to a few important factors. The climate nonprofit mapped 99% of all properties in the lower 48 states, a completist approach FEMA doesn’t take. In addition, the new maps use data to recreate property flooding caused by 55 past major hurricanes, tropical storms and nor’easters. Many states lack flooding-disclosure laws, so this information would otherwise be nearly impossible to find.

First Street’s model takes into account 55 previous major storm events but there are significant gaps. It doesn’t yet include Hurricane Harvey in 2017, which prompted FEMA insurance payouts to 92,000 Texans.

■ First Street 1% annual risk ■ Harvey observed flooding

The new maps also include projections for sudden, heavy precipitation events and data on millions of miles of streams and creeks that aren’t measured by FEMA. And, of course, the first purpose of FEMA’s flood maps is to designate zones for insurance that’s sold in one-year increments—which means the process wasn’t set up to account for climate change over decades. Yet homeowners often make decisions about where to live that can last 30 years or more.

The heightened risk detected in First Street’s data can be mapped across the country in unexpected places. Washington, D.C. sees an 438% increase in properties identified as vulnerable to floods, Utah is adjusted upwards by 419% and Wyoming’s real-estate risk rises by 325%. The new maps also point to a huge spike in flood threat along the spine of Appalachian Mountains in states like West Virginia, Kentucky and Virginia—none of which spring to mind when imagining the looming threat of rising waters.

In fact, First Street’s analysis found nearly one in four properties in West Virginia is at risk from flooding, the highest percentage of real estate in any state. That’s higher than famously flood-prone Florida, where 20.5% of homes are in flood zones.

The new model is also much more sensitive to how major rain storms might overwhelm county drainage systems, a fact that had a big impact on risk mapping in urban areas. In Los Angeles County, for example, First Street found nearly 204,000 properties have a substantial risk from floods—or seven times FEMA’s estimate of 29,000. In Cook County, which includes Chicago, an estimated 11% of 1.4 million properties are at risk, as opposed to the current federal maps which list 2%.

In areas where FEMA’s maps are up to date, the flood-risk assessments by FEMA and First Street are closely aligned. First Street’s maps of Louisiana, a state that faces extensive coastal erosion from sea rise, show 477,000 houses in the high-risk zone right now—84,000 fewer than FEMA’s current map. Mike Amodeo, director of data science for the First Street, says his analysis took into account the recent construction of levees or flood walls that made certain properties less likely to flood than before.

While the new flood-risk maps reflect the power of adaptations like seawalls in the short run, they also reveal limitations over time. By 2050, according to First Street’s projections, another 332,000 houses in Louisiana will be at substantial risk of flooding because of inexorable sea rise. The model doesn’t anticipate that current defenses will save the coastline for long.

The risk maps will also help highlight newly installed protections such as marsh and wetland restorations that can fend off waters. Boston is building a series of sea walls, berms and other structures around it that will act as a barricade against Mother Nature. The new 1,000-acre Seaport District filled with restaurants, bars and gleaming office and residential towers is particularly vulnerable.

■ First Street 1% annual risk ■ Adaptations

While all of Los Angeles is currently protected by flood adaptations, areas like Gardena remain vulnerable because its levee was not designed for 1% annual flood risk.

■ First Street 1% annual risk ■ Adaptations

These new and vastly expanded flood maps are likely to be controversial. After all, what homeowner wants an unaccountable, unelected entity publicly ranking their property as a high risk of damage or destruction? While some owners won’t appreciate this transparency, others will see newly installed protections to fend off waters as selling points, says Danielle Hale, chief economist for Realtor.com.

“Market forces work fast when there are informed participants making the buying and selling decisions,” says Hale. “It’s not surprising that the home next to a beach has flood risk. But this broadens it.”

It took some effort previously for home shoppers to find out if a property was within a flood zone defined by FEMA. If flood scores spread soon from First Street’s website to Realtor.com as planned, risk information will be discoverable far more easily. Hale acknowledges that visibility could change buying decisions and factor into home prices. Realtor.com plans provide information on the validity of the data, and concerns will be directed to a customer-service team.

Insurance companies, banks and businesses often pay for private research that affords access to more accurate data than FEMA’s maps. These powerful interests have already been making decisions accordingly. Almost all flood insurance policies for homes in the U.S.—about 95%—are part of the National Flood Insurance Program run by FEMA because private insurers find it too risky. That leaves taxpayers picking up the tab when devastating floods occur.

Recent academic papers have found banks are using flood information to “blue-line” neighborhoods, offering homeowners fewer or more expensive mortgage services due to more detailed understanding of risk. After big storms, research shows that banks sell off an increased percentage of mortgages in riskier areas to government-backed Fannie Mae and Freddie Mac. Banks are also increasingly asking for modified terms on mortgages in flood zones, such as demanding much more than 20% down at closing.

Even places known to be vulnerable today might see prices shift if flood risk becomes more visible to real-estate shoppers. The median home in Miami is worth about $370,000 and, according to the real-estate website Zillow, that price has increased slightly in the past year. First Street’s data already assigns 30% of properties in Miami-Dade County to the significant risk category and projects the designation will apply to 38% of the county by 2050.

Source: First Street Foundation, Microsoft

Matthew Eby, executive director of First Street, says it’s only fair to bring transparency into a rigged market. “Sophisticated investors have privately purchased flood risk information from for-profit firms for years,” he says. First Street is “correcting an asymmetry of information by providing free access to everyday Americans.”

Others worry that flood mapping down to the level of individual homes requires a granularity of information that First Street can’t muster, with homeowners in the newly identified flood zones left facing harsh financial losses from publicly posted but essentially unverifiable projections of risk. Rachel Cleetus, the policy director for climate and energy program at the Union of Concerned Scientists, believes publishing this information would place a “bullseye” on unsuspecting owners or, in some cases, entire marginalized communities.

“Having detailed risk information is important,” she says, “but it is insufficient without public-policy supports. These people didn’t create the problem and the market alone can be a harsh and inequitably way to deal with the results.”

Mapping America’s Underwater Real Estate

What happens to home prices if flood maps start measuring climate change? Millions of Americans are about to find out.

Flood Risk Projections

Cape Coral, Florida

Charleston, West Virginia

Chicago, Illinois

Miami-Dade County, Florida