House prices fall by around 8.2% in flood-affected communities in the months following disasters, according to a new study.
He also notes a significant drop in homes for sale in these cities.
A study by the Intact Center on Climate Adaptation (ICCA), affiliated with the University of Waterloo, examined the impact of flooding on the housing market.
“This is the first time that real data has been used to illustrate the impacts of flooding on the housing market. These are not scenarios, these are real results,” said Joanna Eyquem, Director of Adaptation Programs to climate change at the CICA.
By studying six cities that have experienced major flooding in recent years, the researchers concluded that flooding lowers the average selling price of homes, increases the average number of days on the market before selling, and reduces the average number of homes. on the market.
To determine which effects were solely attributable to the floods, the researchers compared the housing market in flooded communities with nearby control communities.
For example, after the spring 2017 floods, the average price of homes sold fell by 24% in Gatineau. In the control community, house prices fell by 7%.
The researchers therefore conclude that the floods caused house prices to drop by 17% in Gatineau in 2017.
The average loss in value across the six cities surveyed was 8.2%, a figure that’s just a taste of what’s in store for homeowners in Canada, Eyquem said.
“In Europe, some banks are working with scenarios of up to 45% write-down in high flood risk areas,” she said, adding that climate change will continue to affect the market for lodging.
The CISC study also shows a 44.3% reduction in the number of homes listed for sale within six months of a major flood in a community.
GET THE FACTS BEFORE YOU BUY
The Intact Center suggests that potential buyers consult flood-prone maps before purchasing a property.
Some city governments make these maps available to citizens, “but you have to know how to find them,” which can be tricky, Eyquem said.
Not only can flood-prone maps be hard to find, they are often outdated.
A recent report commissioned by Public Safety Canada from the Council of Canadian Academies indicates that Canadian governments often make decisions based on outdated flood maps.
“Yes, it’s a big problem in Canada, we’re really behind,” Eyquem said.
NEED FOR AN AMERICAN-STYLE RISK RATING SYSTEM
The Intact Center researchers suggest that federal, provincial, territorial and municipal governments develop a flood risk rating system for all properties similar to the flood factor system that exists in the United States.
On the Flood Factor website, it is possible to obtain a free flood risk rating, ranging from 1 to 10, for approximately 142 million addresses in the United States.
“A similar system in Canada would encourage homeowners with unfavorable ratings to protect their homes from flooding,” the study authors write, adding that the rating could be “added to property listings.”
PROTECT NATURAL ENVIRONMENTS
One way to limit floods and their economic consequences is to “develop and implement guidelines and standards for the conservation and restoration of natural infrastructure,” the report says.
Forests, grasslands and wetlands are important barriers to flooding.
The CISC points out that a joint study by the Intact Center and the Insurance Bureau of Canada shows that conserving wetlands can reduce flood damage costs by 40%.
This report from The Canadian Press was first published in French on February 14, 2022.