Real eState

Climate change US real estates bubble is worth up to $237 billion

Published

2 years ago

February 18, 2023

Data: First Street Foundation; Chart: Axios Visuals

A climate housing bubble threatens to erode real estate prices in much of the U.S. in the coming years, posing particular challenges for low-income residents, a new study finds.

Why it matters: With more severe and frequent extreme weather events, the resilience of homeowners and communities is on the line.

How lenders, insurance companies and others incorporate escalating flood risks into property prices is a key question facing at-risk communities.

Zoom in: The study, published Thursday in Nature Climate Change, finds that nationally, property prices are currently overvalued by between $121 billion and $237 billion, when compared to their actual flood risk.

The current prices mask the true danger that these properties are exposed to, because of factors such as outdated FEMA flood maps, incentives in the National Flood Insurance Program and home buyers who lack climate change information.
The paper is the result of a collaboration between experts at the Environmental Defense Fund, First Street Foundation, Resources for the Future, the Federal Reserve and two universities.
Scientists relied on First Street’s updated modeling that simulates rainfall-induced, or pluvial flooding, as well as coastal flood events.

Between the lines: The authors found that right now, 14.6 million properties face at least a 1% annual probability of flooding, putting them in the so-called 100-year flood zone.

However, this is expected to increase by 11% in a mid-range emissions scenario, with average annual losses spiking by at least 26% by 2050.
In dollar terms, the areas with the greatest property overvaluations are along the coasts, where there is overlap between rising seas, fewer flood disclosure laws, and a high number of residents who may not view climate change as a near-term threat.
Much of the overvaluation comes from vulnerable properties located outside of FEMA’s 100-year flood zone.

Once the higher flood risks become evident, homeowners will lose equity in their property, which is a particular threat to lower-income homeowners.

The big picture: The pattern of the total overvaluation of at-risk properties in the Lower 48 states reveals hot spots of risk.

Specifically, coastal areas show high amounts of overvaluation.
Spikes also show up in West Virginia and other parts of Appalachia.
In Texas, it is clear that the biggest cities, including Houston and Dallas, have a significant amount of overvaluation.
Florida tops the list, accounting for about $50.2 billion based on the actual threat, the study found.

What they’re saying: “There is a significant amount of ‘unknown’ flood risk across the country based solely on the differences in the publicly available federal flood maps and the reality of actual flood risk,” Jeremy Porter, head of climate implications at First Street Foundation, said in a statement.

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Real eState

National housing market in ‘holding pattern’ as buyers patient for lower rates: CREA

Published

7 hours ago

September 16, 2024

Anne Joseph

OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.

The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.

On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.

CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”

The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.

The number of newly listed properties was up 1.1 per cent month-over-month.

This report by The Canadian Press was first published Sept. 16, 2024.

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Real eState

Two Quebec real estate brokers suspended for using fake bids to drive up prices

Published

5 days ago

September 11, 2024

Anne Joseph

MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.

Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.

Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.

She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.

The two brokers were suspended in May 2023 after La Presse published an article about their practices.

One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.

This report by The Canadian Press was first published Sept. 11, 2024.

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Real eState

Montreal home sales, prices rise in August: real estate board

Published

1 week ago

September 6, 2024

Anne Joseph

MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.

The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.

The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.

The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.

QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.

Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.

This report by The Canadian Press was first published Sept. 6, 2024.

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