By: Benyamin Davidsons

A new analysis from PropertyShark shows that some flood-prone neighborhoods have been immune to slumps in home prices.  The newly published analysis, which studied residential sales in 2012—before Superstorm Sandy hit—and through 2023,  showed home buyers do pay a premium for less risky properties versus flood zones.  The data showed that over the years, home prices in non-flood zones rose 53 percent, whereas in riskier flood areas the increase was just 33 percent from 2012 to 2023.  There were, however, some exceptions—a handful of neighborhoods that are considered flood zones saw home prices rise despite the risk.

As reported by Crain’s NY, the median price in flood zones in neighborhoods, including Brooklyn’s Red Hook, Greenpoint and Gowanus, saw dramatic increases compared to nearby, and even less-vulnerable residential neighborhoods.  Notably, those named neighborhoods which experienced a spike all saw the rise of new luxury development in the past few years.

In Red Hook, the median residential price for low-risk areas of the neighborhood soared 169% to $1.45 million from pre-Sandy levels.  Meanwhile, in Red Hook’s flood zone prices jumped a whopping 279% to roughly $2.5 million.  More than 10 years after Sandy, the city is still in the midst of designing a series of flood protections for the neighborhood.

In Greenpoint, the median sale price of homes in the neighborhood’s low-risk areas, the median price rose 81%, comparatively to just over $1 million.  In the neighborhood’s flood zones, however, prices shot up 188% to roughly $1.5 million.  In 2005, the city had rezoned the northern Brooklyn neighborhood to allow developers to reshape the industrial waterfront with posh residential towers.

Home prices in floodable areas of Gowanus, which was similarly rezoned in 2021 allowing for new high-rise apartment buildings, jumped 172% to $2.1 million, while prices in non-flood zones rose 169% to $1.8 million.

Per the Property Shark report, which was authored by Eliza Theiss, the trend-resistance in those neighborhoods may to some extent be because New York sellers have not been required, until recently, to warn prospective buyers that a property is at risk of flooding.  “To be perfectly honest, I’m so surprised about the increase in prices,” Theiss told Crain’s. “I think most people would assume that flood risk is something you must be informed of, and then you wake up one day to flooding and find out that, actually, it wasn’t and you’re in a high-risk zone.”

A loophole in state law has allowed sellers to pay just a $500 fee to bypass warning prospective buyers of a potential flood risk.  Last month, Gov. Kathy Hochul signed a bill into law cementing a flood risk right-to-know for homebuyers. The law requires sellers to disclose if a residential property is in a flood zone, or susceptible to flooding in any way, and if flood insurance claims have been filed for the property.  Earlier this year, a similar state law for took effect for rental homes.

Theiss said it’s likely that some Brooklyn buyers just don’t know how severe the risk of flooding is for their home. She said they may be in for a rude awakening when the new flood insurance maps are released next year by the Federal Emergency Management Agency, making it harder for some homes to be insured against flooding.