Real estate wealth inequality and exposure to natural disasters

Prior studies, relying on aggregate income data and focusing on residents, typically find that low-income households are more exposed to flooding. Yet this approach overlooks half of the exposed housing stock--those owned by non-residents. Using dwelling-level data covering the entire French housing market, I show that the picture changes markedly when distinguishing by ownership status. Once non-resident ownership is accounted for, flood risk appears to disproportionately affect second homes, while subsidence primarily impacts owner-occupied dwellings. These patterns carry important policy implications. First, untargeted flood insurance subsidies disproportionately benefit second homes, whereas subsidence coverage mainly supports owner-occupied dwellings. Second, using a new approach to estimate risk discounts, I show that natural disaster risks are not priced into rental, second, and vacant properties, contributing to at least 15% of the total overvaluation in flood-prone areas. Finally, place-based adaptation policies, such as building resilient defenses, may fail to target the most critical areas if ownership structures are ignored. These findings underscore the importance of examining inequalities by ownership status and covering the entire housing market, rather than focusing solely on residents’ incomes. JEL Codes: D31, G52, Q51, Q54