Possibly a housing mortgage collapse rivaling 2008.

From the New York Times:

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The real estate industry, particularly along the vulnerable coastlines, is slowly awakening to the need to factor in the risks of catastrophic damage from climate change, including that wrought by rising seas and storm-driven flooding.

But many economists say that this reckoning needs to happen much faster and that home buyers urgently need to be better informed. Some analysts say the economic impact of a collapse in the waterfront property market could surpass that of the bursting dot-com and real estate bubbles of 2000 and 2008.

The fallout would be felt by property owners, developers, real estate lenders and the financial institutions that bundle and resell mortgages. …

In April, Sean Becketti, the chief economist for Freddie Mac, the government-backed mortgage giant, issued a dire prediction. It is only a matter of time, he wrote, before sea level rise and storm surges become so unbearable along the coast that people will leave, ditching their mortgages and potentially triggering another housing meltdown — except this time, it would be unlikely that these housing prices would ever recover. …

Much of the uncertainty surrounding climate change focuses on the pace of the rise in sea levels. But some argue that this misses the point because property values will probably go under water long before the properties themselves do. …

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In the past year, home sales have increased 2.6 percent nationally, but have dropped about 7.6 percent in high-risk flood zones in Miami-Dade County, according to housing data. Many coastal cities are taking steps toward mitigation, digging runoff tunnels, elevating roads and building detention ponds.

James Murley, Miami-Dade’s chief resilience officer, said it was important to avoid spooking the market since real estate investment produces much of the revenue that pays for these upgrades. This balancing act is especially important in Florida because the state and localities rely heavily on property and sales taxes for funding such projects. …

coast-3It is not just property owners, buyers and sellers who are struggling to estimate the potential financial impact of climate change on the real estate market. These risks compound as individual mortgages get bundled and sold as securities. In his April report, Mr. Becketti, the Freddie Mac economist, emphasized how difficult it was to predict whether the bubble in coastal real estate would slowly deflate slowly or suddenly pop.

“Will the value of the house decline gradually as the expected life of the house becomes shorter?” he wrote. “Or, alternatively, will the value of the house — and all the houses around it — plunge the first time a lender refuses to make a mortgage on a nearby house or an insurer refuses to issue a homeowner’s policy?” …

To make matters worse, the National Flood Insurance Program is more than $20 billion in debt. After several major coastal storms, Congress tried to fix the program, passing a law in 2012 requiring that insurance premiums be recalculated to accurately reflect risk. Coastal homeowners rebelled, arguing that the legislation made insurance unaffordable, and in 2014 Congress repealed parts of the law. …

“Coastal mortgages are growing into as big a bubble as the housing market of 2007,” said Philip Stoddard, the mayor of South Miami. But this time, he said, there will not be a rebound because the waters will not recede and properties will eventually lose all of their value.

Politicians are more focused on keeping developers calm and reassuring people that technological solutions will save the day, he said, which plays into an expectation, especially among the wealthiest homeowners, that the government will bail them out if property values crash.