The cover of the Intact Centre’s new flood risk report. (screenshot courtesy Intact Centre)

The University of Waterloo’s Intact Centre on Climate Adaptation today released a report illustrating the heavy financial impact of catastrophic flooding on homeowners and Canada’s real estate market.

The biggest takeaway is that researchers found an average 8.2 per cent reduction in the selling price of houses, 44.3 per cent fewer houses listed for sale and 19.8 per cent more days on the market required to sell a home.

Thus, in a neighbourhood subject to catastrophic flooding, a house that would normally sell at the December 2021 Canadian average price of $713,500 would instead sell for an average of $654,993, reflecting a “flood discount” of $58,507.

There have been similar reports in the U.S. and U.K., but “to our knowledge, this is the first report of its kind in Canada,” said Kathryn Bakos, the centre’s director of climate finance and science.

One difficulty in obtaining the housing info is that researchers said they could not directly access data through the Canadian Real Estate Association (CREA). Instead, “(they) had to build relationships with individual real estate brokers across Canada, in communities impacted by flooding, and then depend on those agents to secure data from their local real estate boards,” a press release reads.

The Treading Water report findings

The data covers the period from 2009 to 2020, detailing six catastrophic flood events in Grand Forks, B.C.; Burlington, Ont.; Toronto; Ottawa; and Gatineau, Quebec. To determine costs, it looked at the six-month periods before and after the flooding events in these cities.

“Some studies do show that there could be a rebounding of price after the six months. But other studies show it takes three to five years or no rebound at all,” said Bakos.

A case study in the report centred on Fredericton, N.B., showed that nine out of the last 10 years the region experienced flooding, whether it was “a million-dollar flood or a $23-million flood.” The study showed value reductions from flooding became priced into the market.

Specifically, Fredericton had experienced major flooding every year from 2008 – 2018, except in 2016. In 2019, the city went through a catastrophic flood. There was no statistically significant difference in house pricing for the major floods six months pre- and post-floods, indicating that predictable floods are factored into home pricing. However, after the 2019 flood, there were fewer houses on the market than six months prior (10.7 per cent), and they were selling for less than their market price at an 8.4 per cent reduction.

About nine per cent of Canadians reside on a one-in-100-year floodplain, while about 11 per cent live on 1-in-200-year floodplains. These percentages are forecast to increase as floodplains expand due to more extreme precipitation driven by climate change.

There are six main recommendations in the report for proactively limiting flood risk:

– Municipalities, banks, insurers and real estate associations should distribute guidance to homeowners on means to lower basement flooding risks.

– The federal government should link the Climate Adaptation Home Rating Program to EnerGuide home energy audits.

– The federal government should update flood risk maps and ensure they are publicly accessible.

– All governments should commit to retaining and restoring natural infrastructure (forests, grasslands, wetlands) to limit current and future flood risk.

– Communities should act now to identify and protect areas at high risk of flooding.

The final suggestion is for the federal government to develop a home flood-risk scoring system based on postal code. It already exists for 142 million U.S. addresses and is available via floodfactor.com.

“You put your U.S. postal code here or your address, and… it’s able to pop out a zero to 10 score of what your flood risk is, depending on where your property is located,” said Bakos. “I would say not only should this be available online, when I’m going to purchase a home when I’m looking at the MLS, I should have a flood-risk score (similar to the walking score).”

How homeowners can mitigate flooding risk

Also noteworthy are the 50 per cent of Canadian renters who don’t have tenant insurance, leaving them vulnerable to personal property loss or additional living expenses in the case of a flood.

“If you’re looking at lower-income individuals, they may not have money to stay in a hotel (or Airbnb). Not only are you dealing with the loss of their clothing and furniture that can’t be replaced, (as well as) potential injury, but then the additional living expenses. Where are these people going to go?” said Bakos. “Now you’re talking about a social issue of either couch-surfing or the worst part, homelessness.”

Homeowners can take steps to mitigate the potential for flood damage.

There are simple and free measures like cleaning out eavestroughs, checking for leaks in plumbing and cleaning one’s backwater valve. Suggestions that cost under $250 include installing window well covers where fire escape permits allow, installing and maintaining flood alarms and removing obstructions to floor drains.

More expensive measures, which might involve working with a contractor, include installing window wells 10 to 15 cm off the ground, installing a backwater valve or installing a backup sump pump with a battery.

Bakos and the report both urge quick action, as these types of floods are becoming more commonplace with each passing year.

“There’s no ‘new normal’ because of how quickly things are progressing. I think a key takeaway is that complacency is not okay. That we need to act with a sense of urgency,” said Bakos.

Scoring flood preparedness of cities, provinces

In February 2021, the centre published a study of 16 Canadian cities’ flood preparedness from 2019-2020. Winnipeg, Charlottetown and Yellowknife fared the worst. The most prepared cities were Edmonton, Toronto and Regina with B+ and Calgary, Fredericton, Halifax and Ottawa with B-.

Overall, the cities were assigned a C+, the same score given in 2015. The 2019 provincial grade was a C in a separate report, with the most prepared being the Yukon with a B-.

In the 2021 federal budget, $63.8 million was dedicated over three years to Natural Resources Canada, Environment and Climate Change Canada and Public Safety Canada to work with provinces and territories to complete flood maps for higher risk areas in Canada. As well, $200 million was dedicated to Infrastructure Canada, over three years, to establish a Natural Infrastructure Fund to support natural and built infrastructure projects to mitigate flood risk.

The Intact Centre is an applied research centre at the University of Waterloo founded in 2015 with a gift from Intact Financial Corporation, Canada’s largest property and casualty insurer.

The co-authors on the report were Dr. Blair Feltmate, head of the centre; Chris Chopnik, associate researcher; and Cheryl Evans, the director of flood and wildfire resilience.