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New from me in @GDI_Policy: Climate change is bearing down on the residential real estate market--and another housing crash is just over the horizon. If policymakers don’t step up soon, we’ll all be soaked. 
1/11 https://greatdemocracyinitiative.org/document/soaked-a-policy-agenda-to-prepare-for-a-climate-triggered-housing-crash/
1/11 https://greatdemocracyinitiative.org/document/soaked-a-policy-agenda-to-prepare-for-a-climate-triggered-housing-crash/
As more neighborhoods in the United States become uninhabitable, and as increasingly frequent floods and flames swallow billions in property values, policymakers must begin to view climate change as the systemic economic threat that it is. 2/11 https://www.nytimes.com/2020/06/19/climate/climate-seas-30-year-mortgage.html
It won’t just be the beach houses of the rich that are soaked. 29 million are at risk of wildfire. 41 million at risk of inland flooding. 14.6 million at risk of 100-year floods, and more. 3/11 https://www.nytimes.com/interactive/2020/06/29/climate/hidden-flood-risk-maps.html
And a century of racist housing policies (restrictive covenants, redlining, and segregation) all but guarantee that Black and brown homeowners, who have been pushed to low-lying areas, will bear the brunt of this storm too. 4/11 https://www.scientificamerican.com/article/flooding-disproportionately-harms-black-neighborhoods/
And just like the last time, sophisticated banks are clearing climate risk off of their books and onto ours. Fannie and Freddie hold $5.5 trillion in mortgage debt--but they have no idea how much climate risk. It’s a tempest in a teapot. 5/11 https://www.politico.com/news/2020/06/08/borrowed-time-climate-changemortgage-market-304130
It’s time to write climate risk into the rules of our housing market--before millions are underwater, this time without any expectation that property values will recover.
We can start with four policies. 6/11
We can start with four policies. 6/11
1. FHFA should invest in asset-level data on climate risk, and make it publicly available. We have a right to know our risk.
2. FHFA should undertake a climate audit and stress tests of their book of business. The findings may be startling, but we need to know our risk. 7/11
2. FHFA should undertake a climate audit and stress tests of their book of business. The findings may be startling, but we need to know our risk. 7/11
3. We need to incorporate climate risk into prices to encourage adaptation, but without forcing existing homeowners to bear all of the risk. Pricing can facilitate some of the changes we need--shaping behavior of developers, lenders, investors, homeowners, and governments. 8/11
4. We need to talk about managed retreat. We can’t continue to insure against a risk this widespread, severe, and frequent. What about a well-resourced, federally financed and administered buyout program--that redistributes equity (and new land) to frontline communities? 9/11
The path that lies ahead is not easy, but the choice is clear: we can wait for a record year of devastation to bring the housing and financial markets to their knees, or we can get out ahead of the storm and build a more resilient & just society & economy along the way. 10/11
If our lack of preparedness for the pandemic has taught us anything, it’s that keeping our heads buried in the sand won’t be an effective mitigation strategy. That’s even more true in a storm surge. 11/End.
