Addressing Housing Shortages and Flood Risks: Challenges and Solutions

A little-noticed flood last summer in an Illinois city that left one dead and swallowed up homes and businesses after heavy rainfall left a damaged community struggling to figure out what’s next.

But after the neighborhood near Keith Creek in Rockford, Illinois, went through at least its third major flooding event in less than 20 years, the city expanded its voluntary buyout program to demolish flood-prone properties and reduce development along the waterway. State Sen. Steve Stadelman said he knew that the city’s decision not to simply rebuild was the right one — even though it takes land off the market for a community also facing a significant housing shortage that’s contributing to higher prices.

Housing Shortages and Flood Risks: A Growing Concern

Rockford is one of 41 large metro areas where housing shortages could be exacerbated by higher flood risks, a POLITICO analysis found. The pattern lays bare how the impact of extreme weather events is growing across states, bedeviling mayors, lawmakers and economic officials on how to expand housing supply knowing the increasing likelihood of it being swept away.

From coastal cities to rural mountain towns to flat Midwestern communities, nearly every pocket of the country is lacking housing units to keep pace with their populations and job growth, driving up prices well above the rate of inflation and resonating with voters as a core issue as homelessness spikes. The nation is short millions of homes, and sales fell to their lowest level in three decades last year due to high prices and mortgage rates.

There’s broad bipartisan support for building more. President Donald Trump has vowed to boost the nation’s housing supply by cutting red tape — while also quickly moving to gut flood protections for federally backed construction of roads, bridges, and other infrastructure. Red and blue states alike are taking aggressive actions designed to boost the supply of housing and lower costs, a push complicated or undermined by the rising threats of floods and other disasters like the Los Angeles wildfires that damaged 18,000 homes and structures just this month.

And it’s universally agreed upon across the spectrum that telling people where to live or not live is politically risky.

“We have to figure this out,” said Ras Baraka, mayor of New Jersey’s largest city of Newark — a metro area that faces both housing shortages and high flood risk — and a 2025 gubernatorial candidate running on a pro-housing agenda. “It’s more dire in my mind than people say.”

To understand which communities are facing the dual threats posed by housing shortages and flood risk, POLITICO analyzed two data sets.

The National Association of Realtors, a trade association, tracks housing supply among large metropolitan areas. In order for housing supply to meet demand, one new housing permit is typically needed for every two jobs created in a metro area, according to NAR.

Flood hazard data comes from First Street Foundation, a nonprofit that analyzes climate risk in the U.S. Unlike the Federal Emergency Management Agency, First Street analyzes a region’s ability to handle rainfall in addition to the typical measures of coastal and river flooding, providing a more comprehensive look into flood hazards by county.

POLITICO compared housing supply and flood-exposure data for 169 large metropolitan areas across 46 states and Washington, D.C. Roughly a quarter of these face elevated risk in both categories.

Challenges Faced by Communities

Managing a fire- or flood-prone region safely or finding ways to build new housing while operating within zoning, land use, and historic preservation restrictions are difficult enough issues on their own for local officials to navigate. But when combined, they have the potential to squeeze communities and further complicate the search for solutions.

“I don’t really like the government telling me what to do,” said Robin Webb, a Democratic state senator from eastern Kentucky who plans to form a legislative task force to deal with resilience issues. “But on a good day, housing is a problem without the disaster. And I do think it’s our role to inform, protect and let people make informed decisions.”

Webb’s district is in the Huntington-Ashland metro area, which spans Kentucky, West Virginia, and Ohio and has the fourth-highest housing shortage in NAR’s analysis. FEMA’s outdated flood risk estimates undercount thousands of properties in most metro areas, according to First Street’s analysis of FEMA’s National Flood Hazard Layer Viewer. But for Huntington-Ashland, the difference is particularly stark: The number of properties in flood zones is over three times the number accounted for by FEMA’s flood maps, and the community has among the highest share of properties at risk out of all metro areas in the analysis.

Solutions for a Sustainable Future

Housing advocates have been making gains at the state level to respond to shortages built up over decades rooted in arduous rules that have made it difficult or impossible to permit additional units, pricing people out of cities and other desirable locations.

Vermont, New York, Colorado, California, Montana, and others have waded into zoning and land use issues typically handled at the local level — generating backlash from municipalities and counties, especially in the suburbs — to eliminate single-family zoning, allow more multi-unit housing and incentivize affordable housing and development around public transit hubs.

Some officials and advocates are hoping for one possible side effect of these changes: getting people out of disaster-prone areas.

Dave Jones, a former California insurance commissioner, said a lack of affordable housing options in denser urban areas that are safer from natural disaster is driving people into suburbs or remote locations more susceptible to flood and fire — a sentiment backed up by a report from California researchers published last year and data from real estate company Redfin. And often, what those homebuyers once thought was a better price is quickly washed away by the expensive property insurance either required or strongly encouraged to protect against the risks of natural disaster.

“There’s a very real tension between the need to substantially increase the supply of housing in many parts of this country and the concurrent need to stop putting more people and businesses in harm’s way,” said Jones, a Democrat. “That tension so far has played out in support of more housing faster in areas where the climate-driven risks are increasing, and we’re seeing more death, injury, destruction and insurance losses.”

There were 27 natural disasters last year that leveled at least $1 billion in damages, the second-most since 1980, and severe storms and tropical cyclones that dump large amounts of precipitation made up the vast majority of the number of disasters and resulting damages.

Many more Americans are likely going to face flood risk in the form of insurance costs in the near future considering just 4 percent of homeowners currently have flood insurance.

Insurers are already raising prices and pulling policies as climate change leaves more and more neighborhoods vulnerable. In the Pacific Palisades neighborhood, where the largest of the L.A. fires broke out, State Farm had dropped 70 percent of its policies just last year — more than any other ZIP code in the state.

Florida is another hotspot facing housing shortages coupled with high flood risk. Miami-Fort Lauderdale ranks third for the greatest flood risk among metro areas with at least 500,000 total properties with 17 percent of its properties in a 100-year flood zone, according to POLITICO’s analysis of First Street data. The area is also facing a need for more housing permits, according to NAR, after experiencing an influx of residents in recent years.

“Housing is costly, and it’s our belief that this is due to the fact that we don’t have sufficient supplies,” said Fort Lauderdale Mayor Dean Trantalis, a Democrat who launched the “Fortify Lauderdale” program to accelerate stormwater and flood prevention systems. “Our reality is we need to diffuse the impact of rainfall. And so we need to go in and start building infrastructure.”

Dual Challenges Across the Nation

But the data shows it’s not just California and Florida facing these dual threats. Inland communities like the Huntington-Ashland metro area and Syracuse, New York, among others, also face housing shortages and high flood risk.

FEMA is in the middle of a lengthy process to update its flood maps to better inform and assess flood insurance policies from the National Flood Insurance Program. The current maps are out of date and don’t “reflect the best available climate science or include information on current flood hazards,” according to a 2021 Government Accountability Office report, the findings of which FEMA concurred.

That’s why the Natural Resources Defense Council and Association of State Floodplain Managers filed a petition to FEMA requesting the agency update its rules for building in floodplains and improve maps to project future flood risk. The agency for its part said through a spokesperson that it “recognizes that the nation needs more comprehensive, accessible, and easy-to-use information about flood hazard risk.”

First Street Foundation found more than twice as many properties to be in flood zones compared to FEMA’s analysis.

Rep. Andy Barr, a Republican from Kentucky representing a region in the eastern part of the state suffering from heavy flooding and housing shortages, said the answer to the housing crunch is “supply, supply, supply.”

Looking Towards Sustainable Solutions

But flooding still has to be a consideration, Barr said, adding that the NFIP “needs desperate reform that discourages rebuilding in flood-prone areas.”

But any policy sticks wielded by lawmakers are sure to spark blowback.

“Politically, for people that are publicly elected officials, it is essentially career suicide to go in and say, ‘I’m going to add 40 percent of all properties in my district as properties that have high flood risk and have to take on this additional mandatory cost of flood insurance,’” said Jeremy Porter, head of climate implications at First Street. “There’s just been a hesitation from Congress to take it on because of the backlash that they get from residents and voters.”

The Biden administration’s Department of Housing and Urban Development finalized a controversial rule last year that will bring about sweeping changes to federally backed housing. It aims to limit property damage from flooding by expanding the areas designated as floodplains and raise minimum heights for structures — standards that HUD admitted would increase building costs but argued would bring greater savings from avoided losses.

“This is a very tricky issue,” Adrianne Todman, acting HUD secretary under Biden, told POLITICO last month. “Not everybody liked that rule, quite frankly.”

Advocates are urging state and local officials not to tear down building code standards and other regulations critical to homes’ ability to withstand flooding and other disasters, which localities might be tempted to do in the rush to build homes cheaply and quickly.

Some experts feel that’s exactly what happened in North Carolina, where the Republican-controlled Legislature rejected updated building code standards and other safety proposals that likely contributed to the decimation in the Asheville region brought by Hurricane Helene last year.

“There are definitely some inevitable tradeoffs,” said Andy Winkler, director of housing and infrastructure projects at the Bipartisan Policy Center, who added that removing regulatory barriers can help unlock additional housing. “But there is a nuance there in that local governments in particular have to consider their very specific environmental and economic circumstances and make changes wisely.”

Half of states have not enacted more recent building code models adopted by standard-setting groups. And more than a third of states, from Virginia to Utah, do not require disclosure of flood risks to prospective homebuyers, according to an NRDC report. Those states often leave homeowners racking up tens of thousands of dollars or more in flood costs over a 30-year period.

It all points to a messy crunch ensuring development battles across the country as residents clamor for affordable housing and officials look to dig out of decades of stagnation and hit the sweet spot on where housing can be safely built — and where it’s just too risky.

“Builders can build a home that can withstand any natural disaster,” said Susan Asmus, senior vice president of regulatory affairs at the National Association of Home Builders, “but A) most people can’t afford it, and B) most people wouldn’t want to live in it.”