One-two punch on home values

If the flood damage from Hurricane Harvey were not enough, homes that took in water for the first time will see their valuations drop, perhaps by as much as 60 percent.

Exactly how much appraised value a newly flooded home will lose depends on its location and how much damage was done. But four separate academic studies following past flood events show that values typically drop by at least 15 percent.

Texas law, by the way, requires a seller to disclose whether a home has ever been flooded.

Lost home value is bad news for tens of thousands of homeowners who saw flooding for the first time this weekend. For most Americans who own homes, that is where their

wealth resides. The only bright spot is that flooded homes tend to regain their previous value within four years, on average.

For the moment, though, Greater Houston has lost billions, if not trillions, of dollars in asset value.

Homes that don’t flood, though, often rise in value as more people seek them out within the same community. This could offset the aggregate value lost to the community. Flooded homes that are rebuilt in a way that prevents future flooding can also show increased value.

The longer-term issue for many Houstonians will be how flood maps are redrawn after Hurricane Harvey, the worst storm in the city’s history. That makes Harvey the new “flood of record” and will trigger new flood-plain maps.

Many residential areas once thought to be in the 500-year flood plain may soon find themselves in the 100-year flood plain, even if they didn’t take on any water. That will force them to buy flood insurance, which is quite expensive.

Houses in the 100-year flood plain generally sell at a discount because of the added long-term expense of flood insurance for the new buyer.

The question for the residents of Greater Houston is what they want to do about future flooding and the future value of their property. Improvements to flood control systems can move property out of flood plains, and thereby boost values.

But are property owners willing to pay for these projects with higher taxes?

In the short term, though, many families will be revising their net worth downward because of Hurricane Harvey. That will have long-term implications for them and our region’s economy.