4 ms·

I'm not sure how to fix this, assuming that global warming does wipe out alot of the Florida coast line. I think he is right that its the banks who will start

I'm not sure how to fix this, assuming that global warming does wipe out alot of the Florida coast line. I think he is right that its the banks who will start the decline by no longer issuing mortgages, starting with long term mortgages. We've already seen it happen in cities that don't have coastal flooding like Detroit. People leave, property values fall, banks stop giving out as many loans, values fall further, property taxes revenue declines and the cycle repeats as the city circles the drain. Ideally you'd have something like a forced relocation where the country/state/county would buy your property from you and you'd move, but with 100's of billions in property about to disappear, it's not really realistic let alone politically feasible for the government to buy everyone's ocean front property and put the bill on the shoulders of someone from Colorado. I mean look at a city like New Orleans, its very easy to argue that it shouldn't have been rebuilt but it was politically impossible for someone to be the voice of reason and state that certain areas of the city be reclaimed and no longer available for residential construction. And that's a relatively poor city, What's going to happen when billionaires island and South Beach starts to continually flood and then slowly start to disappear?

neap24 10y ago
Phasing out Federally subsidized flood insurance would be a start. Giving people an incentive to NOT buy in a flood plane or likely disaster zone seems like a good idea. The only downside (according to the article) is that coastal cities would start to lose tax revenue. But, that problem seems much better than tons of people living on the coast that will eventually be consumed.
- giarc 10y ago
  I live in Calgary and we had a big flood a few years ago. The province and federal government stepped in to help some homeowners that weren't covered by insurance. Following the flood, they did land evaluation and identified homes in the flood plain. If you lived in the flood plain, you would only receive government assistance once. After that, if you stayed in the home, and it flooded, you were on your own. And this was home specific, not buyer specific. So I really should be saying "Your home would receive government assistance once".
  - mjevans 10y ago
    Is that assistance conditional on the property being torn down and reclaimed as a suitable use for a flood plain area (EG a park)?
    - giarc 10y ago
      No, to expand a bit, there were a few classes of flood plain. Some were extreme and the province bought those owners out and tore down the homes. However, there were a ton of properties in the intermediate zone. They would get help to remediate their homes but that home would never qualify for assistance again. As can be imagined, if you sell the home, the next owner needs to be notified that the house no longer qualifies for assistance.
phkahler 10y ago
>> I think he is right that its the banks who will start the decline by no longer issuing mortgages, starting with long term mortgages. We've already seen it happen in cities that don't have coastal flooding like Detroit. Nope. The banks don't care about the risk so long as you have insurance. They will continue to have insurance as long as we continue to subsidize them.
- porpoisemonkey 10y ago
  Are you referring to private mortgage insurance (PMI) or homeowner's/flood insurance? There's a risk that an owner will walk away from the mortgage on a house that has bad long-term value prospects. Other than pooling the risk of those mortgages against stable mortgages I'm not sure how a bank hedges against that scenario.
- jressey 10y ago
  Insurance companies are already changing how they access risk for weather-based catastrophes. Banks will be in lock-step with them.
- stevenwoo 10y ago
  It sounds like the state of Florida provides insurance of last resort because larger insurance companies refused to provide coverage after 1992 with the state created Citizens Property Insurance Corporation. Of course that doesn't meant they won't come asking for a federal bailout when things go pear shaped. https://en.wikipedia.org/wiki/Citizens_Property_Insurance_Corporation https://en.wikipedia.org/wiki/Citizens_Property_Insurance_Co... http://www.rollingstone.com/politics/news/why-the-city-of-miami-is-doomed-to-drown-20130620 http://www.rollingstone.com/politics/news/why-the-city-of-mi...
- quesera 10y ago
  A typical bank mortgage will be for a 30 year term. Flood insurance is typically renewed annually. There is no guarantee of renewal. Banks have assets at risk for longer than the insurance coverage period. They have to be thinking longer term than insurers do.

neap24 10y ago

Phasing out Federally subsidized flood insurance would be a start. Giving people an incentive to NOT buy in a flood plane or likely disaster zone seems like a good idea. The only downside (according to the article) is that coastal cities would start to lose tax revenue. But, that problem seems much better than tons of people living on the coast that will eventually be consumed.

giarc 10y ago
I live in Calgary and we had a big flood a few years ago. The province and federal government stepped in to help some homeowners that weren't covered by insurance. Following the flood, they did land evaluation and identified homes in the flood plain. If you lived in the flood plain, you would only receive government assistance once. After that, if you stayed in the home, and it flooded, you were on your own. And this was home specific, not buyer specific. So I really should be saying "Your home would receive government assistance once".
- mjevans 10y ago
  Is that assistance conditional on the property being torn down and reclaimed as a suitable use for a flood plain area (EG a park)?
  - giarc 10y ago
    No, to expand a bit, there were a few classes of flood plain. Some were extreme and the province bought those owners out and tore down the homes. However, there were a ton of properties in the intermediate zone. They would get help to remediate their homes but that home would never qualify for assistance again. As can be imagined, if you sell the home, the next owner needs to be notified that the house no longer qualifies for assistance.

phkahler 10y ago

>> I think he is right that its the banks who will start the decline by no longer issuing mortgages, starting with long term mortgages. We've already seen it happen in cities that don't have coastal flooding like Detroit. Nope. The banks don't care about the risk so long as you have insurance. They will continue to have insurance as long as we continue to subsidize them.

porpoisemonkey 10y ago
Are you referring to private mortgage insurance (PMI) or homeowner's/flood insurance? There's a risk that an owner will walk away from the mortgage on a house that has bad long-term value prospects. Other than pooling the risk of those mortgages against stable mortgages I'm not sure how a bank hedges against that scenario.
jressey 10y ago
Insurance companies are already changing how they access risk for weather-based catastrophes. Banks will be in lock-step with them.
stevenwoo 10y ago
It sounds like the state of Florida provides insurance of last resort because larger insurance companies refused to provide coverage after 1992 with the state created Citizens Property Insurance Corporation. Of course that doesn't meant they won't come asking for a federal bailout when things go pear shaped. https://en.wikipedia.org/wiki/Citizens_Property_Insurance_Corporation https://en.wikipedia.org/wiki/Citizens_Property_Insurance_Co... http://www.rollingstone.com/politics/news/why-the-city-of-miami-is-doomed-to-drown-20130620 http://www.rollingstone.com/politics/news/why-the-city-of-mi...
quesera 10y ago
A typical bank mortgage will be for a 30 year term. Flood insurance is typically renewed annually. There is no guarantee of renewal. Banks have assets at risk for longer than the insurance coverage period. They have to be thinking longer term than insurers do.