Report: Nearly 40 million U.S. properties are overvalued because of climate-related risks
A new report from the First Street Foundation released Wednesday has found that 39 million U.S. properties are overvalued because damage risks from climate change as a result of flooding, hurricanes, and wildfires ““have yet to be reflected in the insurance premiums.” The largest percentage of those properties—60%—are coastal properties at risk from hurricanes, 30% are vulnerable to flooding, and 10% are in wildfire zones.
At ClimateWire,Thomas Frank writes (paywall):
The foundation’s latest report, “The Climate Insurance Bubble,” says the properties are “likely overvalued due to the underpricing or subsidization of climate risk in their insurance.”
“It has the potential to impact property values in a way that’s similar to what we saw in the last recession in 2008,” First Street CEO Matthew Eby said in an interview.
Other reports have estimated property overvaluation before, but those have tended to focus on either a specific region or a particular type of hazard such as flooding. The First Street report appears to be the first to analyze the entire nation and the combined effect of three kinds of disasters — flooding, wildfires and hurricane winds — on property values.