FEMA Buyouts vs. Risky Real Estate

• Flood gates: A new map reveals where people move after their homes flood and how few property owners are accepting FEMA buyouts.

• Zion of the times: Zions Bancorp ignited old fears about the stability of regional banks with an unexpected loss.

• Freight expectations: Despite fears that tariffs would slow down industrial real estate, Prologis has shown strong results and sees more demand on the way.

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Federal Policy

FEMA Buyouts vs. Risky Real Estate

New maps reveal post-flood migration patterns across the US

Flooding has always been part of American life, but 2025 has pushed the limits of endurance. Homes from the Carolinas to California have been hit again and again, leaving families to rebuild for the second, third, or even ninth time. In many towns, the question isn’t whether another storm will come—it’s how much more people can take before they pack up and leave for good.

That instinct to move, once unthinkable for many homeowners, is becoming part of climate adaptation itself. New research mapping where flood victims go after disasters shows that most who leave their homes don’t go far—they stay within ten miles of the old neighborhood, hoping to preserve community ties. Yet the majority aren’t participating in government buyouts meant to permanently remove homes from flood zones. Instead, they sell or rent to someone else, passing the risk along like a ticking clock.

Federal buyout programs have proven cost-effective and crucial for resilience, saving as much as six dollars for every dollar spent. But as FEMA funding faces political cuts, that progress is in jeopardy. The data suggest that unless buyouts expand and become more flexible, millions of Americans will keep retreating one house at a time—reshaping communities not by design, but by desperation.

Overheard

Regional Bank Jitters Return After Zions’ Surprise Charge-Off

Zions Bancorporation’s recent disclosure of a $50 million charge-off tied to two commercial and industrial loans—including one now alleged to involve fraud—has spooked regional banking markets and reignited fears of hidden credit stress across smaller lenders. The revelation hit especially hard because Zions is not a small player but one of the more prominent regional banks. Its stock tumbled roughly 8.6% as markets digested the implications.

This isn’t the first time investors have been jolted by regional bank missteps. The panic surrounding Silicon Valley Bank and Signature Bank in 2023 still looms large as a cautionary precedent. When interest rates surged, bond portfolios lost value, insured deposits came under pressure, and confidence in balance sheets eroded rapidly. That turmoil taught markets to watch for cracks in underwriting, liquidity missteps, and opaque exposures—even when headline balance sheets look solid.

The difference now is subtle but consequential. In 2025, the pressure isn’t on consumer or mortgage banks but on commercial credit and private credit feeding into regional balance sheets. As late-stage leveraged borrowers, construction loans, and distressed real asset sponsors strain, a single bank's misstep can rattle the whole sector’s confidence. Zions will need to show this is an isolated case, not a symptom of weakened credit controls across peer institutions. For the real estate industry, the assumption of regional bank strength and their ability to lend on commercial property is again suspect.

Warehouse Market Shows Its Strength Yet Again

Many thought tariffs and a slowing economy would finally catch up to the logistics real estate market. Higher costs and softening consumer demand seemed like a bad mix for warehouses that depend on global trade. But Prologis is proving that narrative wrong. The world’s largest industrial landlord reported $2.21 billion in revenue for the third quarter, a 9 percent increase from last year, and signed leases for an impressive 62 million square feet of space. That kind of growth shows that even after years of development, demand for well-located logistics space is still strong.

Prologis CEO Hamid Moghadam said the market is “nearing an inflection point for rent and occupancy growth,” as importers and tenants lock in space ahead of what could be another busy shipping season. That confidence comes at a time when new construction has started to slow. Even after waves of development over the past few years, we’re seeing absorption hold steady. Cushman & Wakefield reported that new industrial completions were down roughly 40 percent year over year in the first quarter of 2025. Fewer new buildings means that existing space, especially newer and more efficient ones, are becoming more valuable.

The takeaway is that logistics real estate continues to be one of the most resilient sectors in commercial property. Even with global trade uncertainty and fewer goods moving through ports, warehouse occupancy is holding steady at around 7.4 percent. While many parts of the real estate market are still looking for signs of stability, industrial landlords seem to have found theirs.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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