Flood Risk and the U.S. Housing Market

45 Pages Posted: 31 Jul 2019

See all articles by Howard Kunreuther

Howard Kunreuther

University of Pennsylvania - Operations, Information and Decisions Department; National Bureau of Economic Research (NBER)

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ; University of Pennsylvania - Finance Department

Carolyn Kousky

University of Pennsylvania

Michael LaCour-Little

Federal National Mortgage Association (Fannie Mae); California State University at Fullerton

Date Written: February 1, 2019

Abstract

As recent hurricane seasons have made clear, flooding can cause a great deal of property damage and human suffering. Indeed, flooding causes the most damage of any natural disaster in the United States and worldwide and affects the greatest number of people. Yet today most households are uninsured, or underinsured, against flood losses and may incorrectly perceive that if they suffer property damage, government agencies and programs will significantly aid them financially soon after the disaster. In reality there is limited financial aid provided by the public sector to disaster victims and it is often delayed in the post-disaster period. This paper synthesizes existing research on the nature of flood risk and the housing market in the United States with a particular focus on the single-family market segment, a large category of the wealth on household balance sheets. We also consider flood risk externalities affecting the housing market more broadly.

Keywords: flood risk, housing market, insurance

JEL Classification: R

Suggested Citation

Kunreuther, Howard C. and Wachter, Susan M. and Kousky, Carolyn and LaCour-Little, Michael, Flood Risk and the U.S. Housing Market (February 1, 2019). Available at SSRN: https://ssrn.com/abstract=3426638 or http://dx.doi.org/10.2139/ssrn.3426638

Howard C. Kunreuther

University of Pennsylvania - Operations, Information and Decisions Department ( email )

3730 Walnut Street
558 & 559 Jon M. Huntsman Hall
Philadelphia, PA 19104-5340
United States
212-854-0423 (Phone)
215-573-2130 (Fax)

National Bureau of Economic Research (NBER)

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6330
United States
215-898-6355 (Phone)

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

Carolyn Kousky (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Michael LaCour-Little

Federal National Mortgage Association (Fannie Mae) ( email )

1100 15th St NW
Washington, DC 20005
United States
202-752-3318 (Phone)

California State University at Fullerton ( email )

5133 Mihaylo Hall
Fullerton, CA 92834-6848
United States
657-278-4014 (Phone)
657-278-2161 (Fax)

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