Soaked: A Policy Agenda to Prepare for a Climate-Triggered Housing Crash

Dr. Lindsay Owens • July 2020

The climate crisis has begun to wreak havoc on the residential real estate market with climate disasters like Hurricanes Harvey, Maria, and Sandy, and the recent California wildfires. Unless we make substantial changes, we face the looming threat of another housing crash, and, like the one before it, Black and brown homeowners will bear the brunt of the storm. The challenge facing policymakers is how to write climate risk into the rules of our housing market— into home prices, mortgage insurance rates, and guarantee fees in the secondary mortgage market — to encourage adaptation and transition, without forcing existing homeowners, particularly those in frontline communities, to bear all the risk.

In this report, Dr. Lindsay Owens introduces proposals for federal regulators to consider in order to better assess and respond to climate risk in the housing market. Proposals include: investment from the federal government in high-quality, asset-level data on all sources of climate risk; assessment of the current climate risks in the federal housing portfolio; modification of existing mortgage subsidies designed to encourage homeownership in light of the intensifying climate crisis; and the consideration of a suite of options to assist homeowners in certain at-risk geographies. Owens focuses on how to equitably manage retreat from geographies facing increasing risk.