The deadly devastation that Hurricane Ida left from the Gulf Coast to the mid-Atlantic coast is likely a preview of what’s to come, as climate change and rising sea levels converge to produce stronger and more frequent natural disasters—and that means homebuyers and homeowners need to be prepared.
Ida crashed into southern Louisiana as a Category 4 hurricane on Sunday and weakened to a tropical depression as it moved over Mississippi, killing four people in those states. At least 29 people were killed as a result of the storm in New York and New Jersey and just outside of Philadelphia, according to reports. Homes were flooded and destroyed, roads submerged, power lines knocked out. Flash flooding caused chaos in the nation’s largest city, with homes in the New York region filling with water and tornadoes ripping through Maryland, Pennsylvania, and New Jersey. “What we’re seeing is the rapid intensification of climate change impacts,” says Jesse Keenan, a real estate professor at Tulane University in New Orleans who studies climate change. He evacuated from the city due to Ida and plans to move to the Philadelphia region. “We can anticipate more frequent flooding and more severe flooding. We’re going to see new flood zones emerge that previously had not been flooded at least within memory.” Poor building decisions, such as paving over wetlands, are worsening the problem, leading to more severe flooding in many areas when heavy rainfall occurs. This extreme weather is expected to push further inland, bringing more rain and flooding to communities that previously hadn’t been considered at risk. Eventually, if these disasters become more common as expected, it could lead to a shift in the most vulnerable real estate markets.
Currently, waterfront real estate is some of the most desirable around. But homes in areas that experience flooding year after year—such as waterfront property in the Gulf of Mexico—could eventually see prices come down. This is true for homes along rivers that flood as well as communities far from the coasts and rivers that also experience flooding in heavy rain.
Conversely, people may pay a premium to trade those views of the azure ocean for locations that are safer from raging waters.
“In some high-risk markets we’re going to see devaluation,” says Keenan. “In some low-risk markets we’re going to see increases in value.”
More homes and communities will likely be at risk
Most folks know by now that New Orleans and areas along the Gulf of Mexico are at risk of storms. But even communities that are removed from the coast or flooding problems could eventually face risk.
Storms are moving farther inland and dropping more precipitation in many cases. So homes in areas that aren’t considered risky are flooding for the first time or more severely.
“A lot of the risks are going to be considerably higher,” says Daniel Swain, a climate scientist at the University of California, Los Angeles. “The risks you’re comfortable with today are not going to be the risks you’re going to be facing 20 to 30 years from now.”
One of the big problems is that many climate experts consider national flood maps woefully out of date. That puts the onus on buyers and owners to educate themselves about their risk. They can talk to local experts and neighbors to learn about previous flooding events. But they should also look at their home’s elevation and proximity to the ocean, rivers, and lakes to get an idea of future risk.
“If you prepare for last year’s storm, then you’re preparing for the wrong thing,” says Robert Young. He is the director of the program for the study of developed shorelines at Western Carolina University in Cullowhee, NC. “We’re seeing hurricanes that are supercharged by sea level change.”
Many affected homeowners won’t have flood insurance—only about 30% of homes in high-risk communities do, according to the Risk Management and Decision Processes Center at the University of Pennsylvania. That’s likely because, despite being heavily subsidized by the federal government, it’s still expensive. Nationally, flood insurance costs about $700 a year, although that varies considerably depending on location, according to personal finance site Bankrate.com.
More than three-quarters of single-family homes at risk of flooding aren’t located in the Federal Emergency Management Agency’s 100-year flood zones, according to a report from climate change analytics provider risQ.
Mortgage lenders use the FEMA data to identify flood-prone areas, and require borrowers to carry flood insurance to buy a home in those zones. However, once the loan is paid off, many homeowners drop the coverage.
“The amount of people who buy flood insurance is woefully inadequate,” says Loretta Worters, a spokesperson for the Insurance Information Institute, an industry trade group. “Flooding happens everywhere, whether you’re in a flood zone or you’re on top of a mountain.”
Homeowners also need to review their homeowners insurance policies carefully. Most do not cover flooding, and some may not pay damages for hurricanes or storm surges.
“It’s imperative to know your risk of catastrophe because it’s often invisible,” says Tom Larsen, a climate risk modeler at real estate data firm CoreLogic. “It’s an infrequent occurrence, so it’s often not visible at the time of catastrophe.”
What will change in the wake of Hurricane Ida?
Whether severe storms will change where people choose to live is the million-dollar question. The work-from-home phenomenon that emerged during the COVID-19 pandemic only increased demand for coastal real estate, since folks could work from their beach homes.
Things “didn’t change after Katrina or Andrew,” says Bob Hunter, director of insurance a the Consumer Federation of America. He ran the National Flood Insurance Program in the 1970s. “Why would it change after Ida?”
Losses from Hurricane Ida in Louisiana, Alabama, and Mississippi are expected to be between $27 billion and $40 billion, according to CoreLogic. More than 90% of the losses of residential and commercial properties are expected to be just in Louisiana, particularly in the New Orleans region.
It’s unclear how extensive the damages are in the New York region in the wake of the flash flooding. Public transit was disrupted, flights were grounded, and scores of homes flooded, with some people drowning in their basements.
Typically, after a devastating hurricane, some people leave. But many more stay and rebuild, despite skyrocketing rebuilding costs. Property values for damaged homes plummet, but they rise for whatever real estate was spared as the displaced need somewhere to live. Real estate experts don’t expect anything to be different this time around.
“Rarely do I not see these areas get redeveloped,” says real estate appraiser Randall Bell, CEO of Landmark Research. He specializes in real estate damages, such as those caused by natural disasters. “People think that’s my home, that’s my community. There’s a sentimental attachment to the neighborhood.”
The most damaged properties, particularly those in Louisiana, could lose about two-thirds of their value. That presents an opportunity for investors to swoop in to buy homes for cheap, renovate them, and resell them for a nice profit, says Bell.
For example, after Hurricane Katrina, homes that would have sold for $150,000 before the catastrophe were reduced to $50,000. Investors bought them, fixed them up, and then sold them for $150,000, says Bell.
In the meantime, homes for rent and sale that escaped unscathed could see increases of 10% to 20%—or more—as locals need places to live while the work is done on their abodes.
“People just think that was horrible but that could never happen again,” says Bell. “But it does.”
Homeowners may want to make their homes safer
Those building homes in riskier areas should consider taking precautions.
Elevating homes a few inches to a foot or even higher could prevent the interior from flooding in a bad storm. Using more water-resistant materials, such as waterproof flooring, could also minimize damage.
But these aren’t cheap fixes. It can cost tens of thousands of dollars to elevate even a modest home. Replacing flooring adds to the cost. And it’s not foolproof.
“Raising your home is not going to do much for you when the power is out and the infrastructure around you is destroyed,” says real estate professor Keenan.