Flooded communities' real estate prices can take a significant hit

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Communities in Canada experiencing catastrophic flooding can expect to see negative impacts on home resales and pricing, a new study shows.

The report from the University of Waterloo released this month examined major floods in five Canadian cities between 2009 and 2020 and found an average reduction in home sale prices of 8.2 per cent.

“Overall, there’s a stigma from floods that is financially impactful regardless of whether a home flooded or not,” says Kathryn Bakos, director of climate finance and science program at the Intact Centre on Climate Adaptation at the university.

“If you look at the average price of a Canadian home in December last year of approximately $713,000, that percentage reduction from a catastrophic flood translates to about $58,000 less on the sale of a home.”

Bakos says the study was limited to data from Gatineau, Que., Grand Forks, B.C., Burlington, Ont., Ottawa and Toronto — despite major floods affecting many other communities in the past decade.

“Overall, the relevant information is easy to analyse, but it wasn’t easy to get the data,” Bakos says, noting national and provincial realty associations declined to provide the relevant data for the study.

“As a result, we had to build good relationships with real estate agents in communities that experienced flooding, and that just so happened to be in those five municipalities.”

Besides the reduction in average price, other important findings were that flooded communities on average experienced a 44 per cent reduction in listings, and listed homes remained on the market for nearly 20 per cent longer than in similar regions, which had not experienced flooding.

To determine the impact, the study looked at real estate resale metrics six months prior to a flood and six months after a flood, Bakos says.

Despite not being part of the study even though its 2013 flood causes billions of dollars in damage, Calgary is noteworthy, she says.

The city has been among the more proactive Canadian cities in recent years in implementing flood prevention and resilience initiatives.

Bakos points to another University of Waterloo report from 2021 on flood preparedness as evidence of its progress, in which Calgary received a B-minus compared with the Canadian average of a C-plus.

“That’s really due to Calgary’s improved flood preparedness particularly when it comes to urban storm drainage assessments and critical infrastructure risk mitigation,” she adds.

Calgary realtor Barb Richardson says questions about flooding come up often when buyers are looking in neighbourhoods close to the Bow and Elbow rivers, such as Rideau, East Elbow Park and Bowness.

Sump pumps are “something buyers agents and (home) inspectors look for in all homes” in flood prone areas, he says.

Backwater valves are another feature buyers may want to prevent sewage backup in storms, but Richardson adds it’s not uncommon for sellers to not know for certain whether the home has one, “but I always recommend buyers ask.”

Bakos says greater awareness is important for homeowners and home buyers alike, but more support is needed to help assess risks and mitigate the costs of installing features like backwater valves.

“We have government incentive programs for energy efficiency in homes,” she says. “We need similar programs for flood protection, too.”