Off-grid living beckons more than just hardy pioneer types. Here’s why it’s taking off.

USA Today

Off-grid living beckons more than just hardy pioneer types. Here’s why it’s taking off.

Katherine Roth – June 12, 2022

The Solterre Concept House in Nova Scotia, an off-grid home featured in the book "Downsize, Living Large In a Small House" by Sheri Koones.
The Solterre Concept House in Nova Scotia, an off-grid home featured in the book “Downsize, Living Large In a Small House” by Sheri Koones.

Living off-grid conjures images of survivalists in remote places and a rustic, “Little House on the Prairie” lifestyle with chores from morning to night.

Yet only a tiny fraction of people living off-grid do it like that, and fewer still live more than an hour from any town.

“Living off-grid doesn’t mean you don’t buy your groceries at a store or take your waste to the local dump,” says Gary Collins, who has lived off-grid, or mostly off-grid, for a decade. “It just means you are not connected to utility grids.”

He has published books on the subject, and leads online classes.

Although precise numbers of off-grid households are hard to come by, Collins estimates that only 1% of those living off-grid are in truly remote areas. Overall, the off-grid movement remains small. But it got a boost after the COVID-19 pandemic hit: City dwellers began to explore different ways of living.

Off-grid living unique to each person 

More-frequent power outages, utility grids’ struggles and price hikes to handle the severe weather events brought on by climate change have added to interest.

The view from an off-grid guest house in Hollister Ranch, Calif., one of the last remaining undeveloped coastal areas in California, located on a wildlife preserve. The Anacapa Architecture firm, in Santa Barbara, California, and Portland, Oregon, has designed several upscale off-grid homes in recent years, and has several more off-grid projects in the works.
The view from an off-grid guest house in Hollister Ranch, Calif., one of the last remaining undeveloped coastal areas in California, located on a wildlife preserve. The Anacapa Architecture firm, in Santa Barbara, California, and Portland, Oregon, has designed several upscale off-grid homes in recent years, and has several more off-grid projects in the works.

There are also those who remain connected to the grid but try to power their homes independent of it. Author Sheri Koones, whose books about sustainable houses include “Prefabulous and Almost Off the Grid,” cites the rise in “net metering,” when your property’s renewable energy source – usually solar – is producing more energy than you use, and your local utility pays you for the excess.

Today, off-grid living encompasses everything from “dry camping” in RVs (with no electrical or water hookups) to swank Santa Barbara estates, from modest dwellings tucked just outside of towns to – yes – remote rustic cabins.

Mount Jefferson looms over off-grid homes at the Three Rivers Recreational Area in Lake Billy Chinook, Ore., on April 26, 2007. Everyone in this community lives "off the grid", part of a growing number of homeowners now drawing all their power from solar, wind, propane and other sources.
Mount Jefferson looms over off-grid homes at the Three Rivers Recreational Area in Lake Billy Chinook, Ore., on April 26, 2007. Everyone in this community lives “off the grid”, part of a growing number of homeowners now drawing all their power from solar, wind, propane and other sources.

“Everyone does it differently and everyone does it their own way, because it’s their own adventure,” Collins says.

Elegant designs for a modern feel

The Anacapa Architecture firm, in Santa Barbara, California, and Portland, Oregon, has built several upscale off-grid homes in recent years, and has several more off-grid projects in the works.

“There’s definitely an increase in traction for this kind of lifestyle, especially in the last two years,” says Jon Bang, marketing and PR coordinator for Anacapa Architecture. “There’s a desire to get more in tune with nature.”

The lifestyle that Anacapa homes aim for is one of modernist elegance, not roughing it. Bang says new technologies can ensure comfortable self-sufficiency.

Another image of an off-grid guest house in Hollister Ranch, Calif., designed by The Anacapa Architecture firm. A high level of sensitivity to environmental impacts was exercised throughout all phases of design and construction, the firm says.
Another image of an off-grid guest house in Hollister Ranch, Calif., designed by The Anacapa Architecture firm. A high level of sensitivity to environmental impacts was exercised throughout all phases of design and construction, the firm says.

Such homes also are carefully designed to take advantage of the site’s landscape features with an eye to sustainability. For example, one of the firm’s homes is built into a hillside and has a green roof.

For those without the means to hire architects, there are numerous recent books, blogs, YouTube videos and more dedicated to the subject.

“A lot of people are interested in it now,” Collins says. “They contact me after watching something on TV or on YouTube and I tell them, `If you learned everything you know on YouTube, you are never going to survive.'”

He makes regular grocery runs, but also grows some of his own food and hunts wild game. He has his own septic system and well. While his previous home was entirely off-grid, with solar panels and a wind turbine for power, his current home is hooked up to an electrical grid, mainly, he says, because the bills are too low to warrant the cost of solar panels.

The off-grid guest house in Hollister Ranch, Calif., designed by the Anacapa Architecture firm, has nearly 360-degree views of the Pacific Ocean.
The off-grid guest house in Hollister Ranch, Calif., designed by the Anacapa Architecture firm, has nearly 360-degree views of the Pacific Ocean.
What health and safety considerations factor into the off-grid lifestyle? 

If you want to be totally self-sufficient, he says, it takes a lot of time and physical effort. You won’t have time to hold down a job. If you’re living in a remote location, you need to consider access to medical care, and whether you are mentally prepared for that much isolation.

“Your wood won’t cut itself. You’ll have to haul water,” he says, warning, “People die off-grid all the time, because of things like chain saw accidents. You have to be very careful and think everything through. No EMS will get to you in time.”

And depending on how it’s done, he says, off-grid living is not necessarily environmentally sustainable – not if you’re driving a fuel-guzzling truck and relying on a gas-powered generator, for example.

Still, improved alternative energy sources and construction techniques are making off-grid living more thinkable for more people, including those who don’t want to haul buckets of water from a well or live by candlelight.

Where did the off-grid movement begin?

Experimental architect Michael Reynolds pioneered the off-grid movement, which gained popularity in the early 1970s in Taos, New Mexico, according to the Taos Pueblo Tourism Department.

Reynolds designed off-the-grid homes called Earthships, according to Earthship Visitor Center, using sustainable building practices, including the usage of discarded steel and tin cans for the foundation of homes.

Architect and experimental house builder Michael Reynolds who used a variety of recycled materials to complete his first experimental home near Taos in 1974. Owned by lawyer Steve Natelson, shown in the picture, the home had a lawn on the roof, a common feature of sustainable design today, but an unusual concept for homes at the time. This experimental lawn required daily attention because of the dry environment.
Architect and experimental house builder Michael Reynolds who used a variety of recycled materials to complete his first experimental home near Taos in 1974. Owned by lawyer Steve Natelson, shown in the picture, the home had a lawn on the roof, a common feature of sustainable design today, but an unusual concept for homes at the time. This experimental lawn required daily attention because of the dry environment.
Inspired by the problem of trash and the lack of affordable housing, Reynolds created the “can brick” out of discarded steel and tin cans.
Inspired by the problem of trash and the lack of affordable housing, Reynolds created the “can brick” out of discarded steel and tin cans.
Architect and experimental house builder Michael Reynolds who lives near Taos, New Mexico, used tires, empty steel beer and soft drink cans as some of the materials used to build the structure, with a goal of building homes 20% cheaper than conventional methods at the time.
Architect and experimental house builder Michael Reynolds who lives near Taos, New Mexico, used tires, empty steel beer and soft drink cans as some of the materials used to build the structure, with a goal of building homes 20% cheaper than conventional methods at the time.
Interior view of the all aluminum beer and soft drink can experimental house near Taos, New Mexico.
Interior view of the all aluminum beer and soft drink can experimental house near Taos, New Mexico.
This photo from June 1974 shows a well housing that architect and experimental house builder Michael Reynolds built from old tires that have been covered with plaster.
This photo from June 1974 shows a well housing that architect and experimental house builder Michael Reynolds built from old tires that have been covered with plaster.

Iterations of these homes evolved over the next decade to incorporate passive solar and natural ventilation.

Reynolds’ legacy continues to be a presence in the region today through a fully off-the-grid community, using exclusively solar and wind power, northwest of Taos. The community sits on over 600 acres and includes more than 300 acres of shared land.

USA TODAY producer Camille Fine contributed.

Biden just declared heat pumps and solar panels essential to national defense

THe Conversation

Biden just declared heat pumps and solar panels essential to national defense – here’s why and the challenges ahead

Daniel Cohan, Associate Professor of Civil and Environmental Engineering, Rice University – June 10, 2022

<span class="caption">President Joe Biden authorized use of the Defense Production Act to ramp up production of several climate-friendly technologies.</span> <span class="attribution"><a class=
President Joe Biden authorized use of the Defense Production Act to ramp up production of several climate-friendly technologies. Werner Slocum/NREL

Solar panels, heat pumps and hydrogen are all building blocks of a clean energy economy. But are they truly “essential to the national defense”?

President Joe Biden proclaimed that they are in early June when he authorized using the Defense Production Act to ramp up their production in the U.S., along with insulation and power grid components.

As an environmental engineering professor, I agree that these technologies are essential to mitigating our risks from climate change and overreliance on fossil fuels. However, efforts to expand production capabilities must be accompanied by policies to stimulate demand if Biden hopes to accelerate the transition from fossil fuels to clean energy.

Energy and the Defense Production Act

The United States enacted the Defense Production Act of 1950 at the start of the Korean War to secure materials deemed essential to national defense. Presidents soon recognized that essential materials extend far beyond weapons and ammunition. They have invoked the act to secure domestic supplies of everything from communications equipment to medical resources and baby formula.

For energy, past presidents used the act to expand fossil fuel supplies, not transition away from them. Lyndon Johnson used it to refurbish oil tankers during the 1967 Arab oil embargo, and Richard Nixon to secure materials for the Trans-Alaska oil pipeline in 1974. Even when Jimmy Carter used the act in 1980 to seek substitutes for oil, synthetic fuels made from coal and natural gas were a leading focus.

Today, the focus is on transitioning away from all fossil fuels, a move considered essential for confronting two key threats – climate change and volatile energy markets.

<span class="caption">Utility-scale solar is now cheaper than fossil fuels. This installation is at Nellis Air Force Base in Nevada.</span> <span class="attribution"><a class=
Utility-scale solar is now cheaper than fossil fuels. This installation is at Nellis Air Force Base in Nevada. Ethan Miller/Getty Images

The Department of Defense has identified numerous national security risks arising from climate change. Those include threats to the water supply, food production and infrastructure, which may trigger migration and competition for scarce resources. Fossil fuels are the dominant source of greenhouse gas emissions that are driving global warming.

Russia’s invasion of Ukraine highlights additional risks of relying on fossil fuels. Russia and other adversaries are among the leading producers of these fuels. Overreliance on fossil fuels leaves the United States and its allies vulnerable to threats and to price shocks in volatile markets.

Even as the world’s top producer of oil and natural gas, the United States has been rocked by price spikes as our allies shun Russian fuels.

Targeting 4 pillars of clean energy

Transitioning from fossil fuels to cleaner energy can mitigate these risks.

As I explain in my book, “Confronting Climate Gridlock,” building a clean energy economy requires four mutually reinforcing pillars – efficiency, clean electricity, electrification and clean fuels.

Efficiency shrinks energy demand and costs along with the burdens on the other pillars. Clean electricity eliminates greenhouse gas emissions from power plants and enables the electrification of vehicles, heating and industry. Meanwhile, clean fuels will be needed for airplanes, ships and industrial processes that can’t easily be electrified.

The technologies targeted by Biden’s actions are well aligned with these pillars.

Insulation is crucial to energy efficiency. Solar panels provide one of the cheapest and cleanest options for electricity. Power grid components are needed to integrate more wind and solar into the energy mix.

Heat pumps, which can both heat and cool a home, are far more efficient than traditional furnaces and replace natural gas or heating oil with electricity. Electrolyzers produce hydrogen for use as a fuel or a feedstock for chemicals.

Generating demand is essential

Production is only one step. For this effort to succeed, the U.S. must also ramp up demand.

Stimulating demand spurs learning by doing, which drives down costs, spurring greater demand. A virtuous cycle of rising adoption of technologies and falling costs can arise, as it has for wind and solar powerbatteries and other technologies.

The technologies targeted by Biden differ in their readiness for this virtuous cycle to work.

Insulation is already cheap and abundantly produced domestically. What’s needed in this case are policies like building codes and incentives that can stimulate demand by encouraging more use of insulation to help make homes and buildings more energy efficient, not more capacity for production.

Solar panels are currently cheap, but the vast majority are manufactured in Asia. Even if Biden succeeds in tripling domestic manufacturing capacity, U.S. production alone will remain insufficient to satisfy the growing demand for new solar projects. Biden also put a two-year pause on the threat of new tariffs for solar imports to keep supplies flowing while U.S. production tries to ramp up, and announced support for grid-strengthening projects to boost growth of U.S. installations.

Electrolyzers face a tougher road. They’re expensive, and using them to make hydrogen from electricity and water for now costs far more than making hydrogen from natural gas – a process that produces greenhouse gas emissions. The Department of Energy aims to slash electrolyzer costs by 80% within a decade. Until it succeeds, there will be little demand for the electrolyzers that Biden hopes to see produced.

Why heat pumps are most likely to benefit

That leaves heat pumps as the technology most likely to benefit from Biden’s declaration.

Heat pumps can slash energy use, but they also cost more upfront and are unfamiliar to many contractors and consumers while technologies remain in flux.

Pairing use of the Defense Production Act with customer incentives, increased government purchasing and funding for research and development can create a virtuous cycle of rising demand, improving technologies and falling costs.

<span class="caption">Heat pumps, which can both heat and cool, are far more efficient than traditional furnaces and air conditioning.</span> <span class="attribution"><a class=
Heat pumps, which can both heat and cool, are far more efficient than traditional furnaces and air conditioning. Phyxter.ai/FlickrCC BY

Clean energy is indeed essential to mitigating the risks posed by climate change and volatile markets. Invoking the Defense Production Act can bolster supply, but the government will also have to stimulate demand and fund targeted research to spur the virtuous cycles needed to accelerate the energy transition.

This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Daniel CohanRice University.

Read more:

Daniel Cohan serves on the Board of Scientific Counselors for the U.S. Environmental Protection Agency. He has received research funding from the Energy Foundation, the Carbon Hub, and various federal agencies.

Climate-driven flooding poses well water contamination risks

Associated Press

Climate-driven flooding poses well water contamination risks

Michael Phillis and John Flesher – June 8, 2022

FILE - Homes are surrounded by floodwaters from Tropical Storm Harvey in Spring, Texas, Tuesday, Aug. 29, 2017. Experts say more intense storms driven by climate change are boosting contamination risks for privately-owned drinking water wells. (AP Photo/David J. Phillip, File)
Homes are surrounded by floodwaters from Tropical Storm Harvey in Spring, Texas, Tuesday, Aug. 29, 2017. Experts say more intense storms driven by climate change are boosting contamination risks for privately-owned drinking water wells. (AP Photo/David J. Phillip, File)
This photo provided by Stefanie Johnson shows Johnson's private well in Blandinsville, Ill. Her well was contaminated during major flooding in 2013. Johnson's family was without drinking water for nearly two months. She says contaminated wastewater likely drained in through the top, causing her well to test positive for E. coli. (Stefanie Johnson via AP)
This photo provided by Stefanie Johnson shows Johnson’s private well in Blandinsville, Ill. Her well was contaminated during major flooding in 2013. Johnson’s family was without drinking water for nearly two months. She says contaminated wastewater likely drained in through the top, causing her well to test positive for E. coli. (Stefanie Johnson via AP)
Neil and Bea Jobe pose in their home March 8, 2022, in Primm Springs, Tenn., which sits near Lick Creek. Several times a year, when there is heavy rain and a nearby creek floods, their well water turns "dingy," Bea Jobe said. While estimates vary, roughly 53 million U.S. residents, about 17% of the population, rely on private wells, according to a study done in part by Environmental Protection Agency researchers. (AP Photo/Mark Humphrey)
Neil and Bea Jobe pose in their home March 8, 2022, in Primm Springs, Tenn., which sits near Lick Creek. Several times a year, when there is heavy rain and a nearby creek floods, their well water turns “dingy,” Bea Jobe said. While estimates vary, roughly 53 million U.S. residents, about 17% of the population, rely on private wells, according to a study done in part by Environmental Protection Agency researchers. (AP Photo/Mark Humphrey)
ASSOCIATED PRESS
FILE - An oil sheen drifts between a sunken shrimp boat and pieces of a destroyed home along Bayou Pointe au Chien in the aftermath of Hurricane Ida in Pointe-aux-Chenes, La., on Sept. 14, 2021. Experts say more intense storms driven by climate change are boosting contamination risks for privately-owned drinking water wells. (AP Photo/Gerald Herbert, File)
An oil sheen drifts between a sunken shrimp boat and pieces of a destroyed home along Bayou Pointe au Chien in the aftermath of Hurricane Ida in Pointe-aux-Chenes, La., on Sept. 14, 2021. Experts say more intense storms driven by climate change are boosting contamination risks for privately-owned drinking water wells. (AP Photo/Gerald Herbert, File)
In this photo taken in September 2017, Sandy Wynn-Stelt, of Belmont, Mich., stands in a wooded area near her home where industrial wastes containing PFAS chemicals were dumped for many years. High levels of the toxic compounds later were detected in drinking water from her well. While estimates vary, studies say roughly 53 million U.S. residents rely on private wells. While many provide safe water, experts say some are vulnerable to contamination from bacteria or other impurities from floodwaters or from groundwater tainted with PFAS or other pollutants. (Nic Antaya/The Grand Rapids Press via AP)
n this photo taken in September 2017, Sandy Wynn-Stelt, of Belmont, Mich., stands in a wooded area near her home where industrial wastes containing PFAS chemicals were dumped for many years. High levels of the toxic compounds later were detected in drinking water from her well. While estimates vary, studies say roughly 53 million U.S. residents rely on private wells. While many provide safe water, experts say some are vulnerable to contamination from bacteria or other impurities from floodwaters or from groundwater tainted with PFAS or other pollutants. (Nic Antaya/The Grand Rapids Press via AP)

ST. LOUIS (AP) — After a record-setting Midwestern rainstorm that damaged thousands of homes and businesses, Stefanie Johnson’s farmhouse in Blandinsville, Illinois, didn’t have safe drinking water for nearly two months.

Flood water poured into her well, turning the water a muddy brown and forcing Johnson, her husband and their two young children to use store-bought supplies. Even after sediment cleared, testing found bacteria — including E. coli, which can cause diarrhea. The family boiled water for drinking and cooking. The YMCA was a refuge for showers.

“I was pretty strict with the kids,” said Johnson, who works with a private well protection program at the local health department. “I’d pour bottled water on their toothbrushes.”

Though estimates vary, roughly 53 million U.S. residents — about 17% of the population — rely on private wells, according to a study conducted in part by Environmental Protection Agency researchers. Most live in rural areas. But others are in subdivisions near fast-growing metro regions or otherwise beyond the reach of public water pipes.

While many private wells provide safe water, the absence of regulation and treatment afforded by larger municipal systems may expose some users to health risks, from bacteria and viruses to chemicals and lead, studies have found.

Risks are elevated after flooding or heavy rainfall, when animal and human feces, dirt, nutrients such as nitrogen and other contaminants can seep into wells. And experts say the threat is growing as the warming climate fuels more intense rainstorms and stronger and wetter hurricanes.

“Areas that hadn’t been impacted are now. New areas are getting flooded,” said Kelsey Pieper, a Northeastern University professor of environmental engineering. “We know the environment is shifting and we’re playing catch-up, trying to increase awareness.”

Pieper is among scientists conducting well testing and education programs in storm-prone areas. After Hurricane Harvey caused widespread flooding along the Texas coast in 2017, sampling of more than 8,800 wells in 44 counties found average E. coli levels nearly three times higher than normal, she said.

Sampling of 108 wells in Mississippi following Hurricane Ida in 2021 produced a similar bump in E. coli readings. Other studies turned up higher levels in North Carolina after Hurricane Florence in 2018.

The following year, above-average snowfall and a March storm unleashed flooding in Nebraska. Levees and dams were breached. Fremont, a city of more than 25,000, turned into an island when the nearby Platte and Elkhorn rivers overflowed.

The municipal system continued to supply drinking water but some nearby private wells were damaged or contaminated. Julie Hindmarsh’s farm was flooded for three days, and it took months to make the well water drinkable again. At times, the cleanup crew wore protective suits.

“They didn’t know what was in that floodwater,” she said.

CONTAMINATION RISK

Groundwater is often a cleaner source than surface supplies because soil can provide a protective buffer, said Heather Murphy, an epidemiologist at the University of Guelph in Canada. But she said that can give well owners a false sense of security, leading them to forgo testing, maintenance and treatment.

“There’s a big misconception that it’s underground, therefore it’s safe,” said Murphy, who estimates 1.3 million cases of acute gastrointestinal illness in the U.S. are caused annually by drinking untreated water from private wells.

Old, poorly maintained wells are especially vulnerable to floodwaters entering through openings at the top. “It just runs right in and it’s full of bacteria,” said Steven Wilson, a well expert at the University of Illinois.

It doesn’t always take a flood or hurricane to pollute wells. Industrial contamination can reach them by seeping into groundwater.

Around 1,000 residential wells in Michigan’s Kent County were tainted for decades with toxic per- and polyfluoroalkyl substances, or PFAS, in landfill sludge from footwear company Wolverine World Wide. The pollution, discovered in 2017, spurred lawsuits and a $69.5 million settlement with the state that extended city water lines to affected houses.

“We thought we were getting this pristine, straight-from-nature water and it would be much better for us,” said Sandy Wynn-Stelt, who has lived across from one of the dump sites since the early 1990s.

She said tests detected high levels of PFAS chemicals in her water and blood, leaving her fearful to drink or even brush her teeth with well water. In a suit later settled, she blamed the contamination for her husband’s 2016 death from liver cancer. She was diagnosed with thyroid cancer four years later.

LITTLE REGULATION FOR WELL OWNERS

While many well owners don’t have the option of hooking up to a public water system, others are happy with well water. They might favor the taste or want to avoid monthly bills and government regulation.

“What I hear from people is freedom,” said Jesse Campbell, private well coordinator for the Midwest Assistance Program Inc., which addresses rural water needs.

Private well owners are responsible for them. While public water systems must meet federal safety standards, those rules don’t apply to wells that have fewer than 15 connections or serve fewer than 25 people.

State and local standards usually involve only construction and design, although some states set tougher rules.

New Jersey requires water quality testing before sales of property with private wells. Rhode Island requires testing when new wells are built and when property with a well is sold.

But many states rely on public outreach and voluntary action to protect private well users.

“There’s an overall lack of education,” Campbell said. He meets with well owners from Montana to Missouri, providing free inspections and advice.

A lot of harm can be prevented if owners make sure the well’s top keeps out debris and that the pump is turned off before a storm to keep out floodwaters. Experts recommend testing after a flood and decontaminating wells with chlorine if a problem is found.

“People aren’t regularly testing,” said Riley Mulhern, an environmental engineer at the research group RTI International.

Indiana’s health department offers testing for bacteria, lead, copper, fluoride and other contaminants. Some land-grant universities and private labs provide similar services.

While many owners know how to maintain their wells, others ignore problems even if the water isn’t sanitary. Water that tastes fine can still be contaminated.

“I wish I had a nickel for everyone who’s walked into a workshop and said, ‘I’ve been drinking this water forever and it’s fine,’” said Jason Barrett, who directs a Mississippi State University program that educates well owners.

It provides free testing. But where such assistance isn’t available, costs can run to a few hundred dollars, according to experts. Some owners avoid testing because they are concerned it will reveal an expensive problem.

Johnson, the Illinois resident whose well was fouled by the 2013 downpour that killed four people and caused $465 million in flood damage, paid about $3,500 for repairs and upgrades.

“Luckily, none of us became ill,” she said.

Even ordinary rainstorms can carry diseases into groundwater, said Mark Borchardt, a microbiologist formerly with the U.S. Department of Agriculture.

“A lot of times people say, ‘Well, no one got sick,’” Borchardt said. “It’s hard to see when people get sick unless it is a huge outbreak.”

Bea and Neil Jobe live in Primm Springs, Tennessee, an hour’s drive from Nashville. Several times a year, when there is heavy rain and a nearby creek floods, their well water turns “dingy,” Bea Jobe said.

The discoloration disappears after a few days but Jobe takes precautions such as keeping bottled water available.

“I guess I’m used to it,” she said.

Flesher reported from Traverse City, Michigan.

Home affordability has ‘collapsed’ in 2022.

Market Watch – The Tell

Home affordability has ‘collapsed’ in 2022. What to expect next, according to B of A

Is a housing crash brewing? Not likely, says B of A

Joy Wiltermuth – June 7, 2022

U.S. new home sales plunged 16.6% in April, even as prices continued to climb, according to government data released on May 24. AFP/GETTY IMAGES

B of A Global sees annual home-price growth as near a peak, not home prices overall. Also, low affordability likely hurts demand, not supply.

The double whammy of surging mortgage rates and skyrocketing home prices has led to “collapsed” housing affordability in America, according to Chris Flanagan’s team at B of A Global Research.

The situation has gotten so bad that it now compares to the “historically low affordability readings” in the fourth quarter of 1987 and the first quarter of 2005, according to the B of A team.

Notably, those years coincide with the “Black Monday” stock market crash of 1987, when the Dow Jones Industrial Average DJIA, +0.80% tumbled about 22.6% in a single trading session, and the start of the subprime mortgage crisis as home prices roared higher from 2000 to 2005, and hit a multiyear high in 2006.

Existing home sales tumbled 33% in the wake of the 1987 crash and 45% in the aftermath of the subprime mortgage debacle. “In this cycle, we think a 35% peak-to-trough existing-home-sales decline is plausible,” Flanagan’s team wrote, in a weekly client note.

After home prices shot up a record 20.6% annually in March, the team thinks that rate of growth probably is “at or near the peaks for this cycle,” the team wrote, considering that a chunk of the appreciation likely stems from historically low mortgage rates that have since vanished.

The cost of a 30-year fixed mortgage nearly doubled to about 5.25% in May from 2.75% last winter. The move higher came as the Federal Reserve began fleshing out plans to raise interest rates and trim its nearly $9 trillion balance sheet in a bid to tackle inflation that recently hit a near 40-year high.

While home prices have continued to climb this year, household wealth tied up in stocks and bonds has suffered, with the S&P 500 index SPX, +0.95% off 14% from its Jan. 3 closing high through Monday and the Nasdaq Composite Index COMP, +0.94% nearly 24% below its peak, according to FactSet data.

However, even in a somewhat “draconian” scenario, where the demand “side for housing is meaningfully altered by reduced affordability, the supply side remains exceptionally supportive” for home price appreciation, Flanagan’s team wrote.

Why? Blame the subprime mortgage mess and decades of underbuilding. Those catalysts led to record low supply of existing homes (see chart), which will take time to “normalize.

Housing crunch likely persists, even if demand dwindles. B OF A GLOBAL

Home supply was tight before the pandemic made it worse, as many families looked for bigger houses outside of big cities to adapt to remote work. That remains a key factor in B of A’s forecast for home prices to climb 15% for 2022 and 5% for 2023.

“Shelter is still scarce and residential real estate is still a good inflation hedge: To the extent there is any distress in housing, and forced sellers emerge, we think owner-occupied or non-owner-occupied buyers will be there to at least partially absorb the sales,” they said.

MoreThe housing market is running hot. Can the Fed cool it before it crashes?

Related: A Chicago official applied for a Section 8 housing voucher in 1993 — but only now ‘made it to the top of the waiting list

Americans are moving out of urban counties like never before

Yahoo! Finance

Americans are moving out of urban counties like never before

Grace O’Donnell and Adriana Belmonte – April 28, 2022

Americans leaving urban counties reached a new high in 2021 as droves of people settled in suburban and exurban counties.

More than two-thirds of large urban counties saw their populations decline, according to a recent report by the Economic Innovation Group (EIG) that used federal statistics. This marked the first time in 50 years that counties with an urban center and more than 250,000 people experienced negative growth as a category.

While some migration patterns had been in effect before the pandemic, COVID-era remote work and delayed immigration accelerated the shift.

“The big key takeaway to me was just how dramatic the effect was in 2021,” August Benzow, the lead researcher on the study, told Yahoo Finance.

Rural areas grew in population between 2020 and 2021. (Map: EIG)
(Map: EIG)

Exurban counties saw the biggest increase across the board, with about 80% gaining population. These counties are defined as areas with “a population smaller than 50,000, at least 25 percent of their population in a large or medium-sized suburb, and must be in a metro with a population of 500,000 or higher.”

“While there has been much discussion of a flight to the suburbs, the share of suburban counties growing actually declined,” the report stated. “Instead, exurban and rural counties saw a rising share of counties that gained population, with non-metropolitan rural counties seeing the highest population gain since 2008.”

The share of rural counties with population growth underscored the demand for more remote places.

‘Bigger, cheaper housing’

Housing affordability and spaciousness are likely culprits for the shift away from major cities.

“The tendency is just for people to maybe be attracted to cities when they’re younger and then move out to the suburbs and exurban places to find bigger, cheaper housing when they choose to have families,” Benzow said. “That trend has always sort of defined the map.”

Urban counties saw huge gains in the early 2000s that began petering out after the Great Recession. In 2011, nearly all of the top 15 counties for population growth were large urban counties, whereas just three were in 2021.

“That trend really picked up after COVID hit and during the pandemic as people started, for different reasons, exiting these more urban counties and moving further out,” Benzow said. “Suburbs are the dominant forces of the landscape in terms of being where the cheap affordable big housing is.”

People wearing masks load furniture into a U-haul moving truck in New York City. (Photo by Alexi Rosenfeld/Getty Images)
(Photo by Alexi Rosenfeld/Getty Images)

The result of the outward expansion from major metropolitan areas such as New York City and Washington D.C. created a phenomenon that has been called the “donut effect.” As counties farther out from city centers grow their populations, city centers become hollowed out due to departing residents.

However, the influx of people to suburbs and exurbs is more welcome in some places than in others.

In some areas like Billings, Montana, the housing inventory hasn’t been able to keep up with the increased demand, which has driven up housing costs for new and long-time residents alike. Other counties surrounding major cities hope to make the most of the population growth.

“There are definitely some negative effects in places that are getting too many people at once,” Benzow said. “But then there’s also the places that have been on the outskirts of metros and have maybe not seen a lot of populations grow and now are benefiting from having more people coming in and creating more jobs and more economic activity.”

Benzow added that “it’s a mixed bag, and it depends on how places can soak up all these newcomers and to what extent that’s a permanent shift too.”

More people left urban areas between 2020-2021, particularly in New York City and the San Francisco Bay Area. (Chart: National Bureau of Economic Research)
More people left urban areas between 2020-2021, particularly in New York City and the San Francisco Bay Area. (Chart: National Bureau of Economic Research)
‘Sunbelt and the Mountain West continued to outshine’

Another population dynamic that showed no indication of slowing down was migration Westward.

For instance, Phoenix’s Maricopa County, Arizona, experienced the most significant population growth despite being classified as a large urban county.

“Overall, the Sunbelt and the Mountain West continued to outshine the rest of the country,” the report stated. “Remote rural counties in eastern Oregon and northern Idaho experienced robust population growth while every single county in Nevada gained population.”

Urban cores in the Great Plains and Midwest generally fared worse, with some exceptions, while all large urban counties lost population in the Northeast. In the South, Wake County in North Carolina, which encompasses Raleigh, bucked the trend by adding 16,651 residents, and metropolitan areas in Texas and Florida largely retained their populations.

Aerial shot of suburban homes under construction in Marana, Arizona.
(Getty Images)

How these demographic shifts affect key issues such as labor markets, political maps, and resource distribution has yet to unfold.

“We’re still kind of waiting for the dust to settle” from the upheaval that the pandemic brought about, Benzow said.

“Some of the effects of the pandemic that drove this outmigration are likely temporary, such as young people moving back in with their parents and the more affluent retreating to vacation homes,” Benzow wrote in the report. “However, it seems less likely that those who purchased homes in the suburbs and exurbs during the pandemic, motivated in part by new remote work options, will be selling and moving back to cities.”

Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance.

Grace is an assistant editor for Yahoo Finance.

Florida might lose its fourth insurance company in as many months as lawmakers are polled on special

CBS 47 Fox 30 – Action News Jax

Florida might lose its fourth insurance company in as many months as lawmakers are polled on special

Jake Stofan – April 15, 2022

Florida has lost three property insurance companies in as many months and could be on the verge of losing another after FedNat insurance was downgraded Friday.

The four losses combined would leave as many as 400,000 policyholders without coverage.

Homeowners in Northeast Florida are now beginning to see the double-digit year-over-year rate hike that was once reserved for places like Miami.

Some state lawmakers are arguing that without a special session, things are just going to keep getting worse.

Ronnie Rohn is 78.

He lives on Social Security and works here and there to make ends meet.

So, when he was told he’d be seeing his homeowner’s insurance increase by $600 this year, it hurt.

“Half our Social Security goes toward medicine and stuff and the extra $600 would help,” said Rohn.

Rohn is far from alone in his financial struggles.

Rising rates in Northeast Florida are driving more and more Duval residents to the state’s insurer of last resort.

Citizens Insurance has seen its number of Duval policies double over the last year.

“What started out as being a south Florida issue has started to work its way throughout the state,” said Citizens spokesperson Michael Peltier.

State Senator Jeff Brandes (R-St. Petersburg) told us the state’s private insurance market is on life support.

He has initiated a call for a special session to help stop the bleeding.

“And the Legislature’s either going to get our arms around this or the whole market is going to start shutting down,” said Brandes.

The Secretary of State sent out an official poll of lawmakers Thursday.

Two-thirds of lawmakers from both chambers will have to agree by Monday for a special session to be called.

Brandes said that even with a special session, any reforms will take between 18 and 24 months to affect rates, but he argues waiting is no longer an option.

“Let’s make this the primary focus of everything we’re dealing on. This is quickly becoming the number one issue and the number one challenge facing the State of Florida,” said Brandes.

We’ll have a first look at the number of those who have voted yes sometime Friday evening.

Backed-up pipes, stinky yards: Climate change is wrecking septic tanks

The Washington Post

Backed-up pipes, stinky yards: Climate change is wrecking septic tanks

Jim Morrison – April 12, 2022

This trench was dug to help alleviate rainwater issues in the yard of Roosevelt Jones, whose septic system has increasingly failed at his Suffolk, Va., home. (Kristen Zeis for The Washington Post)

Lewis Lawrence likes to refer to the coastal middle peninsula of Virginia as suffering from a “soggy socks” problem. Flooding is so persistent that people often can’t walk around without getting their feet wet.

Over two decades, Lawrence, the executive director of the Middle Peninsula Planning District, has watched the effects of that problem grow, as rising waters and intensifying rains that flood the backyard render underground septic systems ineffective. When that happens smelly, unhealthy wastewater backs up into homes.

Local companies, he said, call the Middle Peninsula the “septic repair capital of the East Coast.” “That’s all you need to know,” he added. “And it’s only going to get worse.”

As climate change intensifies, septic failures are emerging as a vexing issue for local governments. For decades, flushing a toilet and making wastewater disappear was a convenience that didn’t warrant a second thought. No longer. From Miami to Minnesota, septic systems are failing, posing threats to clean water, ecosystems and public health.

Video: The psychological impact of climate change

The psychological impact of climate change

Psychological research shows that climate change can alter an individual’s mental health both directly and indirectly, impacting how we respond to this crisis.

About 20% of U.S. households rely on septic, according to the Environmental Protection Agency. Many systems are clustered in coastal areas that are experiencing relative sea-level rise, including around Boston and New York. Nearly half of New England homes depend on them. Florida hosts 2.6 million systems. Of the 120,000 in Miami-Dade County, more than half of them fail to work properly at some point during the year, helping to fuel deadly algae blooms in Biscayne Bay, home to the nation’s only underwater national park. The cost to convert those systems into a central sewer plant would be more than $4 billion.

The issue is complex, merging common climate themes. Solutions are expensive, beyond the ability of localities to fund them. Permitting standards that were created when rainfall and sea-level rise were relatively constant have become inadequate. Low-income and disadvantaged people who settled in areas with poor soils likely to compromise systems are disproportionately affected. Maintenance requirements are piecemeal nationwide. And while it’s clear that septic failures are increasing, the full scope of the problem remains elusive because data, particularly for the most vulnerable aging systems, are difficult to compile.

“The challenges are going to be immense,” said Scott Pippin, a lawyer and researcher at the University of Georgia’s Institute for Resilient Infrastructure Systems who has studied the problem along the state’s coast. “Conditions are changing. They’re becoming more challenging for the functionality of the systems. In terms of large-scale, complex analysis of the problem, we don’t really have a good picture of that now. But going forward, you can expect that it’s going to become more significant.”

Pippin’s work in Georgia is one of several studies as states from New Hampshire to Alabama confront the effects of septic system failures. Michigan’s Department of Environment, Great Lakes and Energy estimates that 24% of the state’s 1.37 million septic systems are failing and contaminating groundwater. A project funded by the National Oceanic and Atmospheric Administration is examining the potential longer-term impacts of climate change on septic systems in the Carolinas. Virginia has created a Wastewater Infrastructure Policy Working Group to address the issue.

An EPA spokesman said the agency didn’t have a report on the septic problem but noted that sea level rise, changing water tables, precipitation changes and increased temperature can cause systems to fail. The infrastructure bill passed last year provides $150 million to replace or repair systems nationwide.

For a century, conventional septic systems have been an inexpensive solution for wastewater. They work by burying a tank that collects wastewater from sinks, toilets, showers and washing machines, holding the solids while the liquid percolates through a few feet of filtering soil, where microbes and other biological processes remove harmful bacteria.

When that doesn’t happen, bacteria and parasites from human waste flow into drinking water supplies or recreational waters, creating a public health problem. Nitrogen and phosphorous, also a byproduct of the waste, pollute waters, creating oxygen-depleted zones in rivers and along the coast, closing shellfish harvests and killing fish.

For decades, septic systems have been designed with the assumption that groundwater levels would remain static. That’s no longer true. “Systems that were permitted 40, 50 years ago and met the criteria at that time now wouldn’t,” said Charles Humphrey, an East Carolina University researcher who studies groundwater dynamics. In North Carolina’s Dare County, which includes Outer Banks destinations such as Nags Head and Rodanthe, groundwater levels are a foot higher than in the 1980s.

That means there’s not enough separation between the septic tank and groundwater to filter pollutants. The threat isn’t only along the coasts. More intense storms dumping inches of rain in a few hours soak the ground inland, compromising systems for weeks. Too little precipitation is a problem as well. The lack of early, insulating snow in the Midwest, attributed to climate change, drives down the frost line, freezing drain fields and causing failures.

Georgia spent years creating a comprehensive database of septic systems, the only state to complete one. “Everybody wants to skip to a solution – how do we build a new infrastructure for the future? But I think the story is really the value of investing in the data and in that preliminary research to make smart investments and wise decisions,” Pippin said.

While Virginia’s Middle Peninsula has a soggy socks problem, Miami-Dade County has a porous limestone bedrock problem. The soil under its 2.7 million South Florida residents allows septic tank effluent to reach groundwater, a problem intensified by climate change.

About half of the area’s 120,000 septic tanks were compromised during storms or wet years, according to a study. Roughly 9,000 are vulnerable to compromise or failure under current conditions. That number is expected to rise to 13,500 by 2040. The solution is to connect properties to a central sewer system, beginning with the most-threatened areas. So far, the county is using $100 million from the American Rescue Plan to begin converting homes to sewer and another $126 million to convert 1,000 commercial septic tanks. The plan is to expand sewer to the 9,000 most vulnerable properties within five to 10 years, if funding can be secured.

Connecting will cost between $5,000 and $20,000. Miami-Dade County Mayor Daniella Levine Cava said the county is looking for funds to help low- and moderate-income property owners.

“What’s at stake?” she asked. “I’m sitting on my 29th-floor office looking out the window at the beautiful bay. This is our lifeblood. Without a clean bay, we don’t have tourism. We don’t have health. We don’t have a marine industry. It is the lifeline, the economic driver.”

The cost Levine Cava outlined can be a barrier to low-income communities. In the Chuckatuck borough of Suffolk, a sprawling city in Southeast Virginia, the mostly Black, elderly residents of the Oakland neighborhood have suffered repeated septic failures in recent years. They blame the combination of new development increasing storm-water runoff and a failure by the city to maintain ditches carrying away the water.

When Roosevelt Jones, 81, moved into the neighborhood in 1961, he used an outhouse. Soon after, he installed septic. But in recent years, his system and others in the neighborhood have increasingly failed, backing up in sinks and toilets. During the 2020 winter, Jones, who has lived in his 1,300-square-foot cottage since 1961, had to pump his tank out four times at $350 each. “Normal is every five years,” he said. “When we get a bad rain, it’s going to flood my septic tank.”

When his toilet fills with sewage, Jones, who retired from a quality control position for a warehouse but still works custodial jobs, slips into a church he cleans up the road.

After the city ran a pipeline through their neighborhood to provide sewer service to a development of more than 100 homes uphill with prices starting at $300,000, residents were given the option to tie into the system. But it came at a cost – roughly $7,000 or more per house. Many in the village are on a fixed income. The price was too high. Only 33 of 75 property owners voted, with 18 of them favoring a sewer connection. “A lot of people got them [the petitions] and ended up throwing them away,” Jones said.

On Virginia’s low-lying Middle Peninsula, surrounded on three sides by the Chesapeake Bay, the Rappahannock River and the York River, Lawrence has had a preview of the effects of climate change and the challenges to septic systems. Failing to address the problem, he said, could eliminate decades of environmental progress.

“You’re sitting on all of the work for the last 30 years to clean up the Chesapeake Bay,” he said. One or two good hurricanes will destroy that because every residential home will become a brownfield because their septic tank is just sitting there full of bad stuff.”

Shortly after Lawrence started at the planning district in 1997, the General Assembly approved alternative septic systems in addition to the conventional gravity-fed systems. They’re engineered to have a secondary treatment that purifies the wastewater before discharging it into the soil.

Now, even those alternative systems are failing. Why? They don’t handle flooding well and flooding happens often on the Middle Peninsula.

Wastewater regulations for septic systems haven’t been overhauled in decades in states. Virginia updated requirements 20 years ago, said Lance Gregory, director of the Department of Health’s Water and Wastewater Services division. A bill passed last year directs the State Board of Health to create regulations making Virginia the first state to include the impacts of climate change on septic. The goal, Gregory said, is to not issue a permit for a system that 10 or 15 years from now will be an environmental and public health problem – and a costly repair for an owner.

Lawrence is looking for solutions, partnering with Rise, a Norfolk-based technology innovations accelerator, in a challenge to design septic systems that can be elevated much like HVAC systems. “Why are we building our communities the same way we built them 100 years ago when we know Mother Nature isn’t operating the same way she did 100 years ago? It makes no sense,” he said. “We’ve got to be reimagining and designing our communities differently. If you can elevate a heat pump, why can’t you elevate a $40,000 septic system?”

The problem percolating underground so concerned William “Skip” Stiles of the nonprofit Virginia advocacy group Wetlands Watch that he created an ad hoc group of policymakers and researchers from Georgia to Maine to share knowledge and discuss solutions.

He hopes the group’s “noodling” on the issues, as he calls it, will inform new regulations. In the end, the answer to the septic problem may not be to improve the regulations and the technology, but to leave threatened areas.

“The septic system is the canary in the coal mine,” Stiles said. “If you’ve got a house and the septic is starting to flood, it won’t be long before the house goes. We ought to be using septic failures as an early warning system for those areas we’re going to have to take people out of.”

Scoop: Ukrainians flock to U.S.-Mexico border

Axios

Scoop: Ukrainians flock to U.S.-Mexico border

Stef W. Kight – March 25, 2022

Nearly 1,000 Ukrainians have shown up at the U.S.-Mexico border so far this month — a jump from the 272 encounters in February, according to Department of Homeland Security documents obtained by Axios.

Why it matters: The numbers are low compared to other nationalities arriving at the border in droves — such as the nearly 17,000 Cubans last month. But Russian and Ukrainian migrants present new challenges for border officials, and highlight the desperation of some fleeing Russia’s invasion.

Between the lines: Homeland Security Secretary Alejandro Mayorkas recently told reporters border officials have been instructed to consider using exemptions for Ukrainians rather than kicking them back to Mexico under a COVID-19-linked policy known as Title 42.

  • This would allow them to apply for asylum in the U.S. The documents indicate at least some Ukrainians have been allowed in to seek asylum.
  • The administration has already paused deportations to Ukraine and other countries in the region, as CBS News has reported.
  • Border officials under President Biden have used Title 42 — a Trump-era policy — to quickly expel migrants more than 1 million times.

What to watch: Recent documents reviewed by Axios highlight local concerns that Russians and Eastern European migrants may be forming a make-shift camp in Tijuana.

  • A similar camp in Del Rio, Texas, hosting mostly Haitian migrants drove national news in September, and forced the administration to quickly take action.
  • The number of Russians arriving at the U.S.-Mexico border has been declining from a high of more than 2,000 in December, to roughly 750 so far this month.
  • It’s still an unusual number, and reflects a broader shift in the demographics of people arriving at the southwest border. During the past year, there have been far more people from places outside of Mexico, Guatemala, Honduras and El Salvador — including such far-flung departure points as Turkey and India.

What they’re saying: “Consistent with the CDC Order, DHS continues to grant Title 42 exceptions to particularly vulnerable individuals of all nationalities for humanitarian reasons,” a DHS spokesperson told Axios.

  • ”All exceptions are made on a case-by-case basis.”
  • The order is still in place for single adults and family units, the spokesperson added.

The big picture: Russia’s invasion has now forced more than 3.7 million people to flee Ukraine, according to U.N. statistics.

  • There’s been growing pressure for the U.S. to do more to aid these refugees.
  • On Thursday, the government announced it would welcome up to 100,000 Ukrainians and others fleeing Russia’s aggression through various pathways.

Meanwhile, U.S. border officials are already struggling with overall large numbers of migrants arriving at the U.S.-Mexico border.

They’re on track to reach 200,000 encounters total for March, the Washington Post reported — the highest monthly total since August.

  • The administration has been preparing for the potential of a mass migration event this spring — especially if policies aimed at inhibiting the spread of the coronavirus are ended in the coming weeks.

What climate change will mean for your home

The Washington Post

What climate change will mean for your home

Michele Lerner – March 24, 2022

What climate change will mean for your home

When Miyuki Hino bought a house in Chapel Hill, N.C., in 2020, she checked an online map that showed the damage caused by Hurricane Matthew in 2016 to evaluate the neighborhood.

“We wanted to know our flood risk before buying, although we’re aware that every storm is different and they can be hard to predict,” says Hino, an assistant professor of city and regional planning at the University of North Carolina at Chapel Hill. “We had to make an offer quickly, so we looked at the map and we asked neighbors about which houses nearby had flooded. We found out that our street is on a slight hill and the homes at the bottom of the hill had more trouble from that hurricane.”

Hino purchased flood insurance, which costs about $300 annually, even though it isn’t required for her home.

“Our first concern is for the safety of everyone in the house,” says Hino. “Our second concern is about property damage in case of a storm. But we’re also concerned about the long-term impact of extreme events on the value of our property.”


Not every buyer is as diligent about evaluating the potential risk of a weather-related disaster, but that may change in the future. Violent storms, wildfires, floods, droughts and extreme heat are among the increasingly visible signs of climate change. While safety issues associated with these events are of prime importance, the frequency and intensity of dramatic natural disasters are beginning to have an impact on property values and the cost of homeownership in some locations. Researchers are analyzing data to help buyers, homeowners, lenders, insurance companies and appraisers evaluate what the future may hold and how that could impact the housing market.

“Most homeowners should care about climate change and the potential impact on their families and property,” says John Berkowitz, CEO and founder of OJO Labs, a real estate technology firm that owns the Movoto listing site in Austin. “Unfortunately, the people who are most likely to be hurt are already disadvantaged in the housing market, such as first-time buyers and minority buyers who are focused on affordability now. They don’t have the luxury of time or money to think about what their property value will be in 2050.”

Lack of knowledge about climate risk makes it difficult for buyers to recognize that their home could be more costly to maintain, more expensive to insure, and more exposed to damage and possible destruction from a storm or fire. All those possibilities could also contribute to a decline in a property’s value or the inability to sell the home in the future. Yet few consumers consider these issues when buying a home.

Fires, floods and home values

Numerous studies have recently looked at the current impact of hazards on property values. For example, Redfin researchers found that homes in areas prone to wildfires sold for an average of 3.9 percent less compared with homes in areas with lower wildfire risk in California, Oregon and Washington state in 2020. Between 2012 and 2020, the median sales price of homes in low-risk areas increased 101 percent compared with an 88 percent increase in the median sales price for homes in areas with a high risk for wildfire, according to the study.

But home values don’t always correlate with climate risks. Hino co-wrote a report with Marshall Burke, an associate professor in the department of Earth system science at Stanford University, titled “The Effect of Information About Climate Risk on Property Values,” that focused on flood risk.

“Our research looked at the impact of regulatory flood plain maps, which are used to determine whether a home needs flood insurance, on home prices,” says Hino. “We expected to see that homes that require flood insurance would be less costly than similar homes that don’t require flood insurance, but that’s not happening.”

The main culprit is lack of information, says Hino.

“I read one study that found that less than 10 percent of buyers know that a house is in a flood plain before they make an offer,” says Hino. “They find out later when their lender checks the [Federal Emergency Management Agency] map to see if flood insurance is required.”

Homes in coastal areas that are prone to flooding are desirable to many buyers for their water views, which keeps their prices high. A 2021 study by Redfin researchers found that homes with a high risk for flooding sold for a premium of 13.6 percent more than homes with a low risk for flooding during the first quarter of 2021, an increase in that premium over both 2020 and 2019.

Unfortunately, FEMA maps have been found to underestimate flood risk. A study by the nonprofit First Street Foundation found that more than 23.5 million properties are at risk of flooding over the next 30 years. First Street Foundation’s Flood Factor tool, which is available to consumers, includes flood risk from urban storm water flooding, storm surge and future conditions such as rising seas.

Mortgage lenders and insurance companies rely on FEMA maps to evaluate flood risk and to inform consumers about the requirement or recommendation for flood insurance. Flood damage is not covered by regular homeowners insurance policies and therefore requires a separate policy. The Research Institute for Housing America (RIHA) at the Mortgage Bankers Association released a study earlier this year – “The Impact of Climate Change on Housing and Housing Finance” – that concluded that the housing industry lacks an accepted indicator to assess climate risk.

“There’s lots of work to do in the industry because there’s no single test for climate projections that lenders can use for risk management,” says Eddie Seiler, executive director of RIHA in D.C. “There are private companies working to build models to understand the risks to homeowners and the financial risks to lenders. Freddie Mac and Fannie Mae are working to come up with climate scenarios, too.”

Seiler says he believes that eventually climate risk may become part of the mortgage underwriting process. The report found that, in addition to increased flood risk and property damage, climate change may increase mortgage default rates, increase the volatility of house prices and possibly produce climate-related migration patterns. If people choose to move away from areas with high risks from fires, floods and storms, that could reduce property values in those communities.

“After Hurricane Katrina, the mortgage industry didn’t know whether borrowers would default on their loans,” says Seiler. “The FEMA maps were way out of date, so people who were at high risk for floods didn’t know it and didn’t have flood insurance. In that case, the federal government stepped in. But we know that when people are underwater on their loans, they default more often.”

Another risk is that if insurance rates skyrocket, the cost of having a home would be so high that owners would be unable to repay their loans, Seiler says.

“Insurance companies raise rates as much as 20 or 30 percent in high-risk areas compared to low-risk areas,” says Brian O’Connell, a senior insurance analyst at InsuranceQuotes.com in Bucks County, Pa. “Buyers should expect to see rates increase as we see more floods, fires and heat waves. Alternatively, some insurance companies may simply get out of the business, which could also increase costs because of the lack of competition for customers.”

Some insurance companies also raise the deductible for specific events such as hurricanes, which leaves homeowners responsible for thousands of dollars of repair costs, according to O’Connell.

Consumers and climate risk

The unpredictability of climate change makes it difficult to evaluate the risk for a specific event to occur at any particular property. Even wildfires sometimes skip over some homes. Hurricanes and tornadoes have uneven impacts on homes within the same neighborhood.

Another obstacle for home buyers is that seller disclosure rules vary by jurisdiction. Sellers are not always required to share information about risks associated with natural disasters or previous damage.

“We found that in states with stricter disclosure laws there was a higher correlation between pricing and flood insurance,” says Hino. “In states such as Louisiana, Texas, Oklahoma and South Carolina, home prices are lower on homes that carry a risk of floods because buyers are aware of the risk.”

One solution is to provide data about possible future increases in storms and extreme heat directly to buyers and to real estate agents who can share that information with house hunters, says Berkowitz. Movoto includes information on climate risk for each listing on their site from ClimateCheck.

“Consumers can look now at listings on sites such as Redfin and Realtor.com for flood risk scores and climate scores,” says Seiler. “That helps to get people thinking earlier about the potential risk from floods, fires and storms.”

Consumers can also go directly to sites such as ClimateCheck, Flood Factor, Attom Data Solutions Home Disclosure Report and CoreLogic’s RiskMeter to review hazard risks that include storms, floods and wildfires.

“We’re working with climate scientists to develop analytics on what climate change means, such as whether there will be more hurricanes or stronger hurricanes and whether the issue will be storm surges or high winds,” says Tom Larsen, principal for insurance and spatial solutions at CoreLogic, a data analytics firm based in Irvine, Calif. “The challenge with these perils is that you don’t see identical damage to each house. So we use our spatial modeling to look on a granular level at every house. We can look at the elevation above the sea level of the first floor of a house and follow wildfire patterns property by property.”

Since CoreLogic primarily provides analytics to industry professionals such as insurance companies and lenders, its focus is on what it would cost to repair or rebuild a property. Mortgage and insurance companies need the information because of their financial commitment to the property.

“Consumers want to know if their home will lose value, but it’s tough to evaluate the market price of a property versus the physical cost of rebuilding,” says Larsen. “But consumers also need to know their total cost to live in a home. Eventually, I think predicting insurance costs based on climate risk will become part of the mortgage process because it’s part of the cost of ownership.”

For buyers today, assessing the potential cost from climate risk is one more thing to pay attention to and is challenging to evaluate, says Larsen.

“Eventually, we’ll get to the point where people can see an average score that demonstrates what the risk is now, the expected cost of possible damages and a prediction of future potential costs,” says Larsen. “That’s not necessarily to tell someone not to buy someplace, but to help them understand the risk they’re accepting by buying in certain locations.”

O’Connell recommends hiring a good buyers’ agent who will warn consumers about high insurance costs or elevated risk for natural disasters.

“Buyers should do their due diligence and check insurance premiums ahead of time for different areas, so they understand what they’re getting into if they choose to buy near water, for example,” says O’Connell. “They should also read their insurance policy, so they know what happens if there’s a weather event and to make sure they’re covered for a wildfire or wind damage. If they’re not comfortable reading it, they should ask a lawyer to review it or talk to an insurance expert.”

Buyers may want to factor in costs related to adapting their homes for climate change, says Berkowitz.

“For example, homeowners in places that are beginning to see more severe winters need to consider the cost of winterizing their homes with more insulation and better windows,” Berkowitz says. “Homeowners in traditionally cooler climates like Seattle are finding themselves investing in air conditioning now that the summers are hotter there.”

Climate awareness has received a low level of attention so far, but that won’t last forever, especially as climate risk increases, Berkowitz asserts.

However, Berkowitz acknowledges, it’s hard to predict whether climate change will decrease the desirability of homes in some areas because of safety issues or because of the higher cost of ownership. It could just mean that homes in some areas appreciate less over the next 30 years than they did over the previous 30 years.

“Home buyers and owners need to recognize the value of their house today and understand how it could change in the future,” says Berkowitz. “They need to be aware of the full cost of ownership, including maintenance and insurance and how those costs could rise.”

How to evaluate climate risk when house hunting

Check all listings on sites such as Realtor.com, Movoto and Redfin for information about climate-related risks such as floods and fires.

Ask neighbors about recent storms and damage.

Ask your real estate agent for information about floods, fires and storms in the area.

Check the address of a property on sites such as ClimateCheck, Flood Factor, Attom Data Solutions Home Disclosure Report and CoreLogic’s RiskMeter.

Depending on the local disclosure laws, ask the seller and listing agent for information about previous flood or fire damage.

Request a homeowners insurance estimate as early as possible to determine affordability.

Ask a home inspector to look for evidence of previous storm or fire damage.

Find out if storm-resistant features have been added to the house, such as hurricane shutters, stronger windows and mesh coverings for vents in fire-prone areas. If not, ask for a cost estimate to add those features.

Ask if the community is taking steps to mitigate storm risk.

America’s big cities are turning into housing catastrophes. If we want to fix this mess, we should try and copy Tokyo.

Business Insider

America’s big cities are turning into housing catastrophes. If we want to fix this mess, we should try and copy Tokyo.

Jairaj Devadiga – October 9, 2021

A view of residential houses in Tokyo, Japan.
A view of residential houses in Tokyo, Japan. Getty
  • In major cities around the world, housing is becoming less and less affordable.
  • Tokyo, Japan, is a notable exception, with prices barely rising since 1995.
  • The US has restrictive, often absurd regulations, and should instead mirror Tokyo.
  • Jairaj Devadiga is an economist specializing in public policy and economic history.
  • This is an opinion column. The thoughts expressed are those of the author.

In major cities around the world, housing prices have spiraled out of control.

In California’s Bay Area, the median house price is $1.3 million. In Vancouver, the average household must save for 34 years to make a down payment on a house, and put aside 85% of its pre-tax income for mortgage payments. In Sydney, a decrepit house without any toilet facilities sells for $3.5 million.

In this sea of craziness, Tokyo has been an island of sanity. Its housing prices have barely risen since 1995. This is not due to deflation either.

While the population of Japan as a whole has been shrinking, Tokyo has been growing. Between 1995 and 2019, the population of Tokyo grew by 2.17 million, or just above 90,000 per year on average. To accommodate all these new people, lots of housing had to be built. Over the same time period, there was an average of 153,000 housing starts annually.

study by the Fraser Institute illustrates what happens when housing supply fails to keep up with demand. Between 2015 and 2019, 120,000 new jobs were created in Vancouver and Toronto. In the same time period, there were only 57,000 housing starts every year. Since demand was growing more than twice as fast as supply, prices skyrocketed. The same story played out in almost every major city. Lots of new jobs being created, lots of people wanting to move, and not enough homes being built for all of them.

There are numerous bad policies which prevent the construction of more housing. Chief among them are restrictive zoning laws. In most cities with expensive housing, vast swathes of residential land are reserved exclusively for single family homes. Until very recently, the worst of the bunch was San Jose, with 94% of the land being off limits for apartment buildings. No wonder it is the least affordable city in America.

Not only does this make housing costlier for middle and low income folks, but also subsidizes mansions for the rich. The land on which a mansion sits would be worth a lot more if an apartment building could be built on it. The developer would make a profit even if they sold each apartment at an affordable price.

However, because that’s not allowed, developers won’t bid for that land, thus driving down its price.

While Tokyo does have low density zones, these do not prohibit multi-family buildings. Thus it is not uncommon to see a three story apartment building right next to a single family home.

Apart from zoning, cities dictate minimum lot sizes and maximum floor area ratios (how much of the plot is covered by the building itself), which further stifle construction. In much of Mumbai, for instance, the floor area ratio was capped at 1.33 until 2018.

This had the disastrous result of pushing poor people into slums, as they could not compete with affluent families for the limited housing. In 1971, 22% of Mumbai’s population lived in slums. By 2010, this had risen to 62%. By contrast, Tokyo allows floor area ratios as high as 13, and even higher with government permission.

Another problem is cities wanting to preserve too many historical sites. For instance, cities often declare old homes or commercial establishments to be historical monuments, which prevents them from being torn down and replaced with apartment buildings.

In some cases, cities prevent development even when the historical monument itself would be untouched. For instance, last year, a historic preservation board in Seattle rejected a proposal for a 200-unit apartment building because it would be taller than nearby historical monuments. While Tokyo has historic buildings, its criteria for preservation are much stricter and thus don’t get in the way of affordable housing.

Another important factor in raising housing prices is over-regulation. A recent report by the National Association of Home Builders estimates that regulations add almost $94,000 to the price of new homes. The vast majority of these regulations are purely aesthetic, such as mandating certain types of landscaping and architectural styles, or banning vinyl sidings.

This is not exclusive to American cities. A study on India’s Ahmedabad shows that unnecessary regulations add 34% to the cost of housing. By contrast, Tokyo has very few common sense regulations; mainly to protect against the frequent earthquakes. As long as developers follow these and the very liberal zoning laws, they are free to build as they please.

At this point, you might wonder why these restrictive rules persist if they are so obviously bad. Why is liberal city-planning the exception, rather than the norm? To answer this, we must examine the policy making process itself, to understand the motivations of all participants.

Consider San Jose, with its 94% single-family zoning. The politicians in San Jose were catering to the wishes of their constituents; the people already living in San Jose. Those voters wanted high prices. To them, their house is an investment, which would lose value if more housing were built in their neighborhood. It would also result in new neighbors bringing in a different culture from what the residents are used to.

People who wanted to move to San Jose, but couldn’t due to high prices, would benefit from more liberal planning. They might live in different parts of California, or even in other states. Obviously they don’t get to vote in San Jose elections, thus local politicians have no incentive to help them.

The same process plays out across every city, resulting in sky-high prices.

At the state or national level, though, the political calculus changes completely. People in a particular city might want to restrict housing development, but everyone else wants more. Thus state and national politicians have an incentive to liberalize.

This is exactly what happened in Japan. It too had local governments choking the housing market, resulting in a massive housing bubble in the 1980s. This prompted the national government to enact a series of reforms to rein in housing prices.

The national government formulates building codes, zoning laws, and other city-planning regulations for the entire country, giving very little leeway to local governments.

Recently, governor Gavin Newsom did something similar in California, by finally abolishing single-family zoning statewide, and also loosening some other restrictions.

To win elections, local politicians must necessarily keep down the supply of new housing. It is up to state and national governments to deny them that power, and quickly. Otherwise, home-ownership will remain a pipe-dream for most people.