Millions of homeowners face flood risks without realizing it, and climate change is making it worse

By 2050, 16.2 million properties will be at ‘substantial risk’ of flooding in a given year, report finds.

And it's not just properties along the coast or near rivers. 

"When Hurricane Harvey struck Southeast Texas in 2017, it provided a real-life stress test of the plans for flood risk in a highly vulnerable region. Southeast Texas failed that test. More than half of the homes engulfed by floodwaters were located outside city- and federally designated 100-year floodplains."

"Nationally, there are at least 6 million households that are unaware they’re living in homes that have a 1 percent chance of flooding in each year — putting them within a '100-year' flood zone. This is nearly 70 percent more homes at substantial risk of flooding than are within the Federal Emergency Management Agency’s Special Flood Hazard Areas, a designation that determines eligibility for the National Flood Insurance Program."

"This count is set to grow substantially in coming decades due to the effects of climate change, including sea level rise, which will make hurricane storm surges more damaging, as well as precipitation extremes."

"The report, from the nonprofit flood research and communications group First Street Foundation, is aimed at leveling the playing field between buyers and sellers, and democratizing specialized flood risk analyses that insurance companies and consulting firms are producing but charge hefty sums to access."

Now, a prospective buyer can see a property’s flood risk score, which First Street calls the “Flood Factor,” along with a map showing flood information, for 142 million properties in the Lower 48 states.

First Street is providing property-level mapping free on its website.

As reported by The Washington Post

https://www.washingtonpost.com/weather/2020/06/29/flood-risk-climate-change/?utm_campaign=wp_post_most&utm_medium=email&utm_source=newsletter&wpisrc=nl_most

Check out your property at: https://www.floodfactor.com/ 

Homeownership Reality

One of my favorite financial writers, Jonathan Clements, writes about "House Rules" in a recent blog post: 

“Real estate discussions almost invariably fall hostage to anecdotal evidence. We all know folks who supposedly made a mint in real estate, as well as people who lost their shirt. But forget the anecdotal evidence, and instead focus on statistics and commonsense. To that end, here are my 13 rules for real estate:

1. Homeownership isn’t as safe as it feels.
2. We shouldn’t buy unless we can see staying put for at least five years.

3. Over the long haul, home prices nationwide should rise roughly in line with per-capita GDP.
4. The land underneath our homes should appreciate, but the dwelling itself will depreciate

5. Any gain in our home’s value will likely be largely or entirely offset by transaction costs, maintenance, property taxes and homeowner’s insurance.

6. The benefits of leverage are often offset by the cost of leverage.
7. The mortgage-interest tax deduction has always been overrated—and, today, that’s truer than ever
8. If you’re a homeowner with a fixed-rate mortgage, what you really want is inflation.
9. While a home’s price appreciation and mortgage-interest tax deduction will likely prove disappointing, homeowners enjoy one huge benefit: They get to live in the place.
10. All homes should be priced to deliver the same expected total return.
11. A paid-off home is the cornerstone of a comfortable retirement.
12. Remodeling is a money loser.

13. A real estate agent’s greatest financial incentive isn’t to get us the best price, but to get us to act quickly.”

Read all the details at: https://mailchi.mp/jonathanclements/humbledollar13-rules-for-real-estate?e=56625ff43a

Rental Rates Rising Among Retiring Boomers

"A fully paid-off home—once a quintessential part of the American dream, is becoming far less popular among a new generation of retirees. In lieu of the stability and security home ownership (supposedly) provides, more and more retiring Baby Boomers are choosing the convenience and flexibility of apartments and condominiums."
"In fact, a recent study by Harvard University’s Joint Center for Housing Studies found that rental rates steadily increased among seniors aged 55 to 75 from 2004 to 2013, and that the 75 and older crowd was the only group to see it drop. What’s more, many if not most of these older renters are former homeowners. A Rent.com survey of apartment managers actually found that 29 percent of Americans transitioning from home ownership to renting were between the ages of 50 and 65."
Maybe it's time to re-think the importance of homeownership... http://www.thinkadvisor.com/2015/04/20/rental-rates-rising-among-retiring-boomers

Should You Include Your Home in Your Net Worth?

Financial planner Jason Hull explains why it is a mistake to include the full market value of your house in your net worth:  "your house cannot independently generate income except in a reverse mortgage, which has its own twists. Basically, owning a home free and clear eliminates the need for you to have a housing expense—save, of course, for property taxes, insurance, and home maintenance costs. If you were to sell your house, then you’d need to use the money that you generated to create a stream of income to pay for your subsequent living arrangements, whether that’s buying another house, renting one, or moving into assisted living." Read the full analysis at: http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2012/09/05/should-you-include-your-home-in-your-net-worth_print.html