A climate change housing bubble is on the horizon
Feb 17, 2023
Episode 864

A climate change housing bubble is on the horizon

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And there's a lot at risk.

Although climate change risks are well known, they are often unaccounted for in property values. New research shows that when flood risks are taken into account, property prices are overvalued by as much as $237 billion. So what does this all mean for the U.S. real estate market and a looming climate change housing bubble? We’ll also discuss the bombshell legal filing by Dominion Voting Systems and what it reveals about Fox News’ business model. Plus, we play a round of Half Full/Half Empty!

Here’s everything we talked about today:

Are you half full or half empty on something we talked about? Or maybe you have a question that you want to ask us? Let us know by calling 508-U-B-SMART or sending us an email to makemesmart@marketplace.org!

Make Me Smart February 17, 2023 transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Amy Scott 

Suspense.

Kai Ryssdal 

It’s killing us. Suspense is killing us. Her everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart. And if it’s not welcome back, if it’s your first time, where you’ve been? Anyway, make today make sense is what we do.

Amy Scott 

Welcome regardless. I’m Amy Scott. I’m in for Kimberly Adams today. Thanks, everybody joining us on the podcast and on the YouTube livestream for economics on tap.

Kai Ryssdal 

Yes, it is. Yes, it is. Yes, it is. So we’re gonna do the news as we usually do. We’re gonna do a little bit of beverage checking. Then we’ll take a break. And then we’ll play a game, Half-full/Half-empty. Amy Scott, what are you drinking out there in Baltimore, Maryland. Oh, it’s sad. Today, I’m drinking some peppermint tea with some manuka honey because I’ve had this… I don’t know if you guys have had these endless colds that seem to be cycling through households. But that’s that’s me this week. It’s California, man. We don’t get those winter colds. We’re outside. Oh, you totally do. You just don’t call winter colds. I do. No, no, no, seriously, seriously. It doesn’t happen out here. It doesn’t happen.  Maybe it’s because your kids are grown and they’re not in those germ factories that are elementary schools anymore. That could that could totally be. Totally 100% could be.

Amy Scott 

So what are you drinking?

Kai Ryssdal 

I’m having I’m having a hazy IPA from Beachwood Brewing down in Huntington Beach. Same four pack that I bought two weeks ago, because I’m not drinking a whole lot of beer these days. It’s tough to ramp up after dry January. I’ll tell you that man. You have a couple of beers after dry January. You’re like, “Whoa, what is going on?” So anyway Yeah, welcome to my world. That’s me pretty much every time. So… I know. So let’s do some news, I suppose, shall we? Yeah, let’s do it. You want to go first? Alright, I feel like I’m dying to talk about this one. So I want to hear about it.  I cannot. It’s so the news item that I have picked. And it’s a little outside our lane. But you can’t not talk about the story. The filing yesterday, or maybe it was two days ago, late in the afternoon. But I think was yesterday by Dominion Voting Systems, saying that their suit against Fox News ought to go forward. And as part of their filing, they have submitted to the court and thus released to the public a bunch of internal documents from Fox News, in which we discover that Fox News primetime hosts are deceitful, dishonest, misrepresentative, and absolutely full of it. In terms of what they actually believe and what they’re saying to each other and what they’re saying on air. It’s absolutely extraordinary. It’s absolutely extraordinary. Gives lie to the whole thing. I can’t. Yeah scary.  I just can’t.

Amy Scott 

It’s it’s it’s appalling. It really is appalling. Definitely worth reading these documents. The concern about stock price. The concern about turning off viewers by telling them the truth. It’s bananas. Made me glad to work for public media. I mean, or just a media company that takes truth, seriously. And values it more than the…

Kai Ryssdal 

Absolutely. And look, Fox News has an absolute first right… first amendment right to exist and nobody’s saying shut him down or anything but one would hope that… Oh God even as these words coming out of my mouth, I understand how naive they are. One would hope that Fox News viewers having now seen behind the curtain would take Fox News for what it is, which is a propaganda outlet, but I guess they won’t. I just. I don’t get it.  Yeah, I did check the Wall Street Journal story about this today, because it’s another Murdoch owned company and you know, it’s there. You can read it right there. So I hope people see Brian Stelter. Yeah, totally. Brian Stelter, who wrote sorry. Brian Stelter, who used to work for CNN but got but got fired, actually, for his, in some part, his stance on what Fox News was doing. Because Chris Licht, the new CEO of CNN wants it to be more down the middle. Brian Stelter wrote a piece for The Atlantic that I highly recommend that we’ll put on the show page. Totally interesting take from a guy who has been watching television news, excuse me for a long time. And just talking about the deceit and the lies and the and the misinformation. It’s, it’s truly just, it’s terrible, terrible, terrible, terrible that I just I can’t handle it. I can’t handle it. Anyway, what do you got? Well, it’s depressing in a different way. Might as well get this out of the way before our game. We’ll cheer you up in a minute promise. So you know, I spent the better part of last year reporting on sea level rise and housing in South Florida. And today, there was kind of an interesting update to what we were basically looking at, which is, you know, a housing market in Florida that seems to be untethered from the reality of the risks they face from climate change. So Axios did a piece about this study published yesterday in the journal Nature Climate Change. And it looks at basically, how real estate prices are overvalued, in many, many states when considering the flood risk that are sort of unpriced. And so they estimate that real estate prices are overvalued, nationally by as much as 237 billion dollars when compared to flood risk.

Amy Scott 

Yeah. In Florida, which is no surprise that that’s the biggest number, it’s $50 billion, in California 17 billion, Texas 10 billion, several other states are in the 3-4 billion range. And there’s some pretty high profile groups involved in this report. It’s a collaboration between the Federal Reserve, the First Street Foundation, which is a nonprofit that models flood risk and other climate hazards, as well as a couple of universities. A lot of this unpriced risk, which I think is interesting comes from properties that are technically outside of FEMA’s 100 year flood zone. So those are houses with a 1% annual chance or probability of flooding. But that’s increasingly going to change as more and more properties are in flood zones, not just from coastal flooding caused by sea level rise and storm surge. But from you know, you’re familiar with this now, pluvial flooding, that heavy rainfall that’s intensifying as well.

Kai Ryssdal 

I didn’t know what it was called. That’s a great name.  Oh, my God

Amy Scott 

Yeah, I know. I think this may be the first time I’ve actually said that word because I try to avoid jargon. But I guess maybe words like pluvial have to get in all of our vocabularies. But anyway, a quote from the study is, “in general, highly overvalued properties are concentrated in counties along the coast with no flood risk disclosure laws” meaning a seller doesn’t have to disclose that the property floods. “And where there is less concern about climate change. Low income households are at greater risk of losing home equity from price deflation and municipalities that are heavily reliant on property taxes for revenue, are vulnerable to budgetary shortfalls.” Which is, you know, basically what our whole second season of how we survive is about and I don’t mean, this is just one giant plug, although I kind of do but um, no, what I found interesting. I’m glad the Fed and others are paying attention to this, but thinking of this as a bubble, I think is especially scary, because bubbles, pop, you know? And it leads to calamity. So what happens when the market starts to price in this risk? Does it happen all at once? Is it more of a deflation? I don’t know. But I think it’s going to be really scary frankly.

Kai Ryssdal 

I’ll bet you there’s going to be some big insurance company that’s going to come out and and give some estimate. And then that’s going to start the stampede and then it’s going to be like, you know, how do you go broke? Right? It happens very slowly and then all at once, and I think that’s what’s gonna happen. Yeah. Yeah. Yeah, for sure.  Yeah. And you gotta wonder who’s who’s shorting the market? Who’s going to somehow find a way to profit from this. Yes. Yeah. Yeah. Because Because, look, this is a terrible thing to say, but Wall Street will make a boatload of money on this. Wall Street will make a boatload of money. And the taxpayers will be the ones that are left holding the bag. Of course. Totally. On that note, we’re gonna take a quick break and we’ll come back we’ll do round of half-full/half-empty with Drew Jostad. Here we go.   half-full/half-empty is the game, Drew Jostad is the guy in charge. He does the music as well as you will hear in the credits. He gives us news topics, we tell you how we’re feeling about him. Drew Jostad, begin.

Drew Jostad 

Are you half full or half empty on using an algorithm to set the rent prices?

Kai Ryssdal 

That’s a good one. We talked about this on tech this week.  Says the real estate reporter go ahead.

Amy Scott 

The reason I said that is because I actually…

Kai Ryssdal 

It’s so funny. I heard that. I heard that interview. But it was 4:43 in the morning and I hadn’t had my coffee yet. So it kind of went by me to be completely honest I don’t blame you for not quite processing it. Well, so I’m half empty, because this is this all came about because ProPublica did an investigation of this company called “Real Page” that sell software that helps landlords set rent prices. But found that this, you know, maybe artificially inflating rents because if you have a market where a lot of landlords are using this and sharing their data about what they’re charging, and even in some cases encouraged by the software to withhold departments so that they can charge more. There is a risk of if not collusion, at least an artificially expensive market, which we know is, you know, increasingly burdening people who pay rent. I would say I’m half empty, although I did once have to set the rent on my house. We rented it out for a year. And it was really hard to figure out what to charge. So how do you do it? No, I’m dead serious. How’d you do it? Yeah, well, we, honestly we looked at our mortgage payment. And we were like, “We gotta at least cover that plus some expenses of maintenance.” We weren’t looking to make a profit. And we we kind of looked around at other comps, you know, to see if it seemed fair, and it seemed fine. It went with it. You know, it sold. Certainly I’m not, I wasn’t in the business to make money. But it is a bit of an art I would say. I’m sure it is so so in the end, did you get your what you’re asking for rent? Or did people push back? How did it work? We did Yeah. This was a, like a one off, you know, sabbatical kind of situation. We found another academic couple who were looking for a temporary place to live. It worked out really well. They were great. I think if we had been like vac, renting a vacant house, we probably would have had to pay more attention to the market and probably could have gotten a little more. But honestly, we just really wanted it to be easy. Yeah. And I can understand. I mean, companies using the software want it to be easy to write and this thing spits out a number and you’re like, “Okay, that’s what the going rate sounds.” But it just, it takes out that potential for negotiation that you might have. And so anyway, the Justice Department’s looking into it. There have been several lawsuits. It’s going to be interesting to watch where that goes. Yeah, yeah. All right, Drew number two.

Drew Jostad 

Half full or half empty on public policy video games.

Kai Ryssdal 

So this is an interview I did with a woman who is the chair of the Federal Games Guild. They do policy oriented games for the federal government, the most well known of which is probably something called the fiscal ship a game from I guess it’s Brookings, and you have to like do but you you set yourself a bunch of policy objectives, and then you try to figure out how to match the federal budget to those policy objectives. I will tell you it’s really hard. Her name was oh my god, Elizabeth Newberry. She’s at the Wilson Center. Super interesting, really hard. But look, I think gamification is a valid educational and public policy awareness tool. I’m half full. I would say I’m half full too. It’s a great way to learn. I mean, I’ve seen my kids learn so much from games. I think it’s awesome but Kai didn’t didn’t we do something like that? Years ago? Didn’t Marketplace have like a budget game? Oh my god we did. Budget Hero.  It was really popular. Yes!  It was Budget Hero and it was through I think we did it through God. I don’t even know St. Paul and somebody but anyway. Yeah, it’s really hard. It’s really hard. The game is really hard. I wonder if the internet archive can resurface that for us. If it does we’ll put it on the show page. Oh my god, you and I’ve been here too long, but that’s a whole different podcast. Drew save us. Let’s go next please. Next please.

Drew Jostad 

Half full or half empty on incorporating ASMR into your company’s marketing.

Amy Scott 

Oh my god my scalp!

Kai Ryssdal 

Okay. I get confused every time about what ASMR is. Can somebody help me? By which I mean Amy Scott you? Yeah, I’ll do my best I can never remember exactly what it stands for. It’s like autonomous… Drew?

Drew Jostad 

It stands for Autonomous Sensory Meridian Response.

Kai Ryssdal 

Which means what? Some people report getting this like tingly, synth pleasing sensation when they hear certain sounds like fingernails tapping on a hard surface. I’m tapping a book here. Don’t get weird on me. And and it’s really popular. There all these videos. And so this guy, we had this guy on the show, I think on Wednesday, when you were out. Who has this business, he cleans rugs. And he puts it post videos of the rug cleaning online and he has gone insanely viral. I’ve seen them. Oh my god! They’re so watchable though! Oh, this is weird that I’m actually I’m actually getting fired up about this. Those rug videos. They take these dirty, disgusting old rugs and they clean them in the shampoo them and this and that. Wow, that’s crazy that that’s what that’s all about.  Super satisfying to watch. Yes. Really interesting. And he was just so charming. He’s making like 1000 bucks a month or something on the side doing this? He’s not shutting down his cleaning business. But I thought that was pretty cool. So I would say I’m half, wait, this is marketing. The question was specifically about marketing. Wait Drew, what was the question? Give it to us again.

Drew Jostad 

Oh, I don’t know. I guess the question was half full or half empty on boosting your business with ASMR. If you want to be technical about it.

Kai Ryssdal 

You know, Well, this guy… I’m half full. Yeah, sure. Whatever. I mean, look, you gotta make a living. Right? Come on. Wow, that’s interesting about the rug guy. Now I have to go back and listen. Of course now we discovered that I don’t listen to my own show when I’m not in my own show. But that’s a whole different thing. Oh I know. I’m just gonna milk it for all I can. That’s right. All right. Next Drew. Please help.

Drew Jostad 

Taco Bell is opening a cantina in Hollywood. Are you half full or half empty on having alcohol at your Taco Bell?

Kai Ryssdal 

I’m half full. Next question. A beer and a taco? What? That doesn’t need discussion. Well, I’m wait so what in California? One location?

Drew Jostad 

It’s the first one in Los Angeles County. I don’t know for sure state-wide.

Amy Scott 

I have to say I’m half empty. And I’ll tell you why. Because I think of Taco Bell is like, where I go for cheap food that’s like, okay. But when I go out for a drink, you know, I’m expecting something a little more. I don’t know. I just I can’t get excited about a booze in the in the drive thru.

Kai Ryssdal 

Anyway, Oh, my Lord Drew, let’s move on.

Drew Jostad 

Let’s fire up the poll.

Kai Ryssdal 

Oh, is this is it? Fire up the poll. So those of you who are listening in real time on the YouTube live stream, you know what to do. Hopefully, Mel, or somebody is going to feed me the answers once all y’all do the poll thing, because I have not yet figured out how that works. But Drew’s gonna read it. Amy and I will kill some time. We’ll give you like a minute to do the poll. And then we will see how you do on half full half empty, because look, it’s a challenge. Drew go.

Drew Jostad 

Are you half full or half empty on the trend of TV and movies with more sort of “eat the rich” type storylines?

Kai Ryssdal 

That’s a good one.  Alright. All right. Holding on here. We’re holding. I should say that this was a story that aired on Marketplace on Wednesday when I was out. So I have not heard it. It was Kristin Schwab. And I do understand it was a very good piece, very Kristin-y piece. She’s she’s, you know, she’s finding her voice and she’s doing great stuff for us. And I love her pieces.

Amy Scott 

Yeah, it’s been really fun.

Kai Ryssdal 

So I’m gonna have to go back and listen. Alright well, we’ll see. You won’t have to hear me. You can just skip the lead. I oh, yeah. No, because really, that’s what it’s all about. It’s somebody else doing my job while I’m taking the day off. I’m like, “I can’t handle that. I’m sorry. I can’t I can’t handle that.” Well, I think vacations are appropriate. You should just separate yourself from the work. So Yeah, but it’s all just the hell hung up. Whatever. No, it’s not Kai’s therapy session today is it? It’s all about how hung up I am on my professional identity. But anyway. That’s a whole other podcast, which I’m here for it. No, I’m not. No, I’m not doing that. I have thoughts. Alright, so do we have any results? I don’t know. So look, it’s been 173 votes. We’re gonna give you guys 10 more seconds. And then somebody is going to have to Slack me the result

Drew Jostad 

Although you guys have to weigh in first.

Kai Ryssdal 

Oh, yeah. All right. Amy you go first. Oh we have to weigh in on it first. Okay. Oh, well, okay, so I’m half full, because I may have my own class hang ups. And I think it’s super fun to make fun of the rich and enjoy their suffering. And I thought Kristen’s story, which I recommend was great, because it explains sort of how what we’ve all collectively been through the past several years has kind of contributed to this this trend and all the shows she talks about. I mean, I haven’t seen Succession but the White Lotus  Oh, really?

Amy Scott 

Glass Onion. What are some of the other ones. The menu. Super dark stuff.

Kai Ryssdal 

The Menu was weird. Was that the one with Ralph Fiennes? Yes. Where he plays the chef and  I walked out I had to walk out, it was too weird.

Amy Scott 

You did?!

Kai Ryssdal 

Out of my living room. I mean, it’s totally bizarre you kidding me? And I’m a I’m a huge Ralph Fiennes. But are you kidding me with that thing? Glass Onion I loved. I have the feeling that I know when you walked out. Yeah, yeah. Yeah. White Lotus I made it like through halfway through the first season and then bailed. Succession. You have to watch Succession. It is incredible. Forget, forget the whole eat the rich thing and billionaires doing all this stuff. And that’s disgusting. And all that jazz. The performances and the dynamic and the way it’s done is just spec-tacular. Truly. And the next season next season drops on the 26th of March. Believe me when I tell you that you and Alex, after the kids go to bed, you guys should just binge watch it. Honest to god it is so good. Alright I know what I am doing tonight.  It’s so so good. It’s like gripping. Anyway. So here’s the poll results, and I. They were there. Mel. God dammit. Alright, sorry. Now we’re gonna get the E now we’re gonna get the E. Eat the rich storylines in movie and television. The glass. The poll is complete with 178 votes. 74% of you are half full 25% or half empty and clearly 1% cannot make up its mind. So yeah, eat the rich is good. I guess is the deal. We like to eat the rich. Yeah. Well, I mean, and not to drag this out. But wealth inequality. In many ways is the worst thing that we that we face in our society. It’s responsible for so many other problems and so let’s have a little fun. You know. I’m sure not all rich people are like that, but it’s kind of fun to watch. Yeah, it is fun to watch. All right, so thank you for participating in the poll everybody and with that, I think we’re done right Charlton hits that thing. All right. We have made it through another week. Congratulations, everybody. We are done for today. We are off for Monday, Presidents Day. In the meanwhile, send us your comments your thoughts your questions, something you want us to cover, something you don’t like that we covered. Whatever honestly just whatever. Let us know. 508-U-B-SMART. Those are all letters U-B-S-M-A-R-T or email us makemesmart@marketplace.org.

Amy Scott 

Make Me Smart is produced by Courtney Bergsieker. Today’s episode was engineered by Charlton Thorp. Drew Jostad wrote the theme music to Half-Full/Half-Empty. Antonio Barreras is our intern.

Kai Ryssdal 

Mel Rosenberg, Emily Macune and Antoinette Brock are the team behind our Friday game. Marissa Cabrera is our acting senior producer. Bridget Bodnar got kicked upstairs, she is the director of podcasts. And Francesca Levy is the executive director of Digital and On Demand. And we’re out of time.

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