UNT Research Provides New Insights for Real Estate Markets on the Anniversary of Hurricane Harvey
Three years ago in
As the first anniversary for Hurricane Harvey's landfall in
"Something that's missing from homebuying in flood-prone regions is the natural incentives that would otherwise discourage people from building or rebuilding," said Leonard, assistant director of
Among the differences, Baen's work finds that the National Flood Insurance Program is underfunded because premiums are lower than costs, and Leonard's work finds that these premium prices are directly reflected in the housing market.
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Study No. 1: The Value Implications of the 2017 Hurricanes and Climate Disasters
In a review of 2017 severe weather, UNT real estate guru
Among the findings:
* The
*
* The
* Disaster damage can have some positive, indirect effects on housing and other markets. Among the winners who see positive real estate gains, Baen points to unflooded properties; suburban communities that are higher in elevation; and multistory properties where upper levels can often be used while first floor repairs are made.
Study No. 2: Flood Hazards Impact on Neighborhood House Prices
In
For a detailed summary, visit https://news.unt.edu/sites/default/files/082018_summaryleonard_floodhousingvalueimpact_leonard_mb_final.pdf.
Among the findings:
* Housing values decrease following repeat flood events but that decrease is often temporary. The closer a home was to a floodplain, the more its value was likely to decrease. Typically, the market value of a house within a floodplain was 3.5 to 12.2 percent lower than an otherwise similar house located outside the floodplain. However, this additional price drop was not permanent.
* Homebuyers often misunderstand the term "100-year floodplain." Leonard says that "the 100-year flood plain designates areas that have a one percent chance of flooding in each year. Because most people aren't great at interpreting statistics, the definition has often been simplified to say that the floodplain is likely to flood once every 100 years. However, this over-simplification leads people to believe that if an area flooded last year, then it might be unlikely to flood this year. This is not correct. Every year, there is a one percent chance of flood."
* Policies that increase National Flood Insurance Program premiums would likely hit existing homeowners hardest. New homebuyers purchasing in a flood plain will pay more for insurance premiums but less for a house, resulting in no net financial loss. However, homeowners located in a flood plain would likely see property values drop and also have to pay more in flood insurance premiums.
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