Storms Be Damned, Florida Keeps Building in High-Risk Areas

Nearly 300,000 new properties nationwide have gone up in flood-prone places since 2019

By Jean Eaglesham and Carl Churchill of The WSJ. Excerpts:

"Florida built 77,000 new properties in high-risk flood areas since 2019, the most in the nation"

"Nationally, 290,000 new properties were built in high-risk flood areas from 2019 through 2023, almost one in five of the 1.6 million built in total in that period"

"Other states with heavy new construction in areas at high risk of flooding include Texas, with 63,000 properties since 2019, California with 21,000 properties, and North Carolina with 11,000"

"“We build in some of the most silly places, knowing what could happen,” said Andrew Siffert, senior meteorologist at insurance broker BMS Group. He added that new development was one of the main reasons insured losses from catastrophes are increasing."

"Home insurers racked up more than $32 billion in underwriting losses in the four years through last year, according to ratings firm S&P Global. The result is premiums “have nowhere to go but up,” Morningstar said in a research note on Monday.

Lenders and developers counter that they take climate risks into account for new buildings. A study by reinsurer Swiss Re found the reduction in hurricane damage because of Florida’s strict building standards was significant. But it was far outweighed by the increased losses caused by an influx of millions of sunseekers. 

Developers are making matters worse by skirting official flood zones while still building in high-risk flood areas, the First Street analysis suggests. Typically, high-risk flood zones are designated by the Federal Emergency Management Agency as official Special Flood Hazard Areas, which exclude factors such as heavy rainfall and can be outdated.

First Street says high-risk zones are bigger than the official maps suggest. Homes built in official flood zones need to get flood insurance if supported by a government-backed mortgage and conform to tougher building codes, making them more expensive for buyers.

Just outside of the official zones, but inside what First Street considers high risk, those requirements don’t exist. That is where developers are building.

Of the 77,000 recently built properties in Florida that First Street identified as at high risk of flooding, 41,000—or more than half—fell outside the official flood zones. Nationally, 211,000 properties were built outside official flood zones but within First Street high-risk areas in the five years through last year, the analysis found."