The U.S. housing market is substantially overpriced because buyers are ignoring climate-driven flood risks, and a correction could cause an increase in mortgage defaults, a new analysis from Milliman indicates. Homes in previously redlined communities already face higher flood risks, and Black communities face disproportionately increasing flood risks. While the 2% overvaluation (more than half a trillion dollars across the entire market) is not as severe as what led to the subprime mortgage crisis that set off the Great Recession, the analysis finds mortgage defaults could still rise by as much as 40% by 2050. Flood risks are rising because of multiple impacts of climate change, caused primarily by the extraction and combustion of fossil fuels. (E&E $; Climate Signals background: Flooding)
