![]() ![]() property that is overvalued by $121-$237 billion because of current flood risk. ![]() housing markets, Nature Climate Change volume 13, pages 250–257) A housing bubble in the hundreds of billions of dollarsĪ 2023 study in the peer-reviewed journal Nature Climate Change has drawn attention to a massive real estate bubble in the U.S. (Image credit: Gourevitch et al., 2023, Unpriced climate risk and the potential consequences of overvaluation in U.S. In 2021, Florida’s real estate industry accounted for $294 billion, or 24% of the gross state product, according to a report from the National Association of Realtors. Florida had the highest property overvaluation - about $50 billion. County-level overvaluation of property from flood risk. Sign up for our newsletters and never miss a story.įigure 1. The climate is changing, and our journalists are here to help you make sense of it. Then, value will crash, a phenomenon I call the Brittleness Bubble.” Something that is brittle is prone to a sudden, catastrophic failure, and cannot easily be repaired once broken. Bonds for big projects, loans and mortgages, business investment, insurance, talented workers - all will grow more scarce. Where meeting that risk is more expensive than decision-makers think a place is worth, it simply won’t be defended. But increased awareness of climate risks, more realistic flood insurance pricing, and reform of government disaster policy could reduce this overvaluation - and the risk of an economically disastrous bubble burst.Ĭlimate futurist Alex Steffen has described the climate change–worsened real estate bubble this way: “As awareness of risk grows, the financial value of risky places drops. The problem will get worse as sea level rises and storms dump heavier rains and if unwise building practices continue. Homes constructed in flood plains, storm surge zones, regions with declining water availability, and the wildfire-prone West are overvalued by hundreds of billions of dollars, recent studies suggest, creating a housing bubble that puts the U.S. ![]()
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