The Deluge

by Stephen Markley

Housing prices had plummeted 7.8 percent year over year, according to the S&P/Case-Shiller National Home Price Index, the largest drop since the 2008 crisis, and this was after a 3.6 percent drop in the fourth quarter of 2035 alone. Most of the metro areas where this was occurring were on the Eastern Seaboard and Gulf Coast, particularly in and around Miami, where homes sat unsold, foreclosures had spiked, lending had tightened, and a full-scale abandonment of all homeowners policies by the hard-hit insurance industry was creeping outward like a cancer. Sound familiar? wrote Krugman. While poor minority neighborhoods turned to flooded ruins, the wealthiest Miamians scrambled for high ground, but now even those neighborhoods are experiencing untenable nuisance flooding. The National Flood Insurance Program has fallen nearly half a trillion dollars in debt despite Congress’s efforts to raise rates for at-risk properties. Rating agencies continue to downgrade the bonds of coastal cities and tax bases are collapsing, which then hamstrings much-needed repairs to the infrastructure needed to keep these cities dry. Much of this has been predictable, but that does not make it any less frightening.