Your'e Right - There Shouldn't Be a Major City in a Flood Plain, But...

...don't blame the homeowners.

Houston’s problem was runaway development in flood-prone areas, accelerated by heavily subsidized federal flood insurance. Now that Hurricane Harvey has turned Conrad’s warnings into reality, it’s worth noting that Houston’s problem was in part a Washington problem, a slow-motion disaster that was easy to predict but politically impossible to prevent. Congress often discusses fixing flood insurance to stop encouraging Americans to build in harm’s way, but the National Flood Insurance Program is still almost as dysfunctional as it was 19 years ago. It is now nearly $25 billion in the red, piling debt onto the national credit card. Meanwhile, cities like Houston—as well as New Orleans, which Higher Ground identified as the national leader in repetitive losses eight years before Hurricane Katrina—continue to sprawl into their vulnerable floodplains, aided by the availability of inexpensive federally supported insurance.

  Politico

And this wouldn't be happening if people with political connections were not making oodles of money off the deal.

Hurricane Harvey is not the first costly flood to hit Houston since that 1998 report. In 2001, Tropical Storm Allison dumped more than two feet of rain on the city, causing about $5 billion in damages. Two relatively modest storms that hit Houston in 2015 and 2016—so small they didn't get names—did so much property damage they made the list of the 15 highest-priced floods in U.S. history.

[...]

Climate change almost certainly made Harvey marginally worse, giving the storm a boost through higher sea levels and warmer sea temperatures. And it’s true that federal flood policies have ignored climate. President Barack Obama tried to change that a bit, ordering federal agencies to account for rising seas and other flood risks when permitting infrastructure projects, but President Donald Trump revoked the order just last week.

Think about it. Trump's livelihood is in real estate. If you can get government insurance to cover ill-planned building projects, you can't lose. (Especially if you're only selling your name.)

An investigation last year by ProPublica and the Texas Tribune found that the Houston area’s impervious surfaces increased by 25 percent from 1996 to 2011, as thousands of new homes were built around its bayous. Houston is renowned for its anything-goes zoning rules, but the feds have also promoted those trends by providing extremely cheap insurance in high-risk areas.

[...]

One $69,000 home in Mississippi flooded 34 times in 32 years, producing $663,000 in payouts. The government routinely dishes out more in claims than it takes in through premiums, and the program has gradually drifted deeper and deeper into debt.

[...]

Environmentalists, taxpayer groups and other reformers across the political spectrum have tried to rein in the program, pushing to raise premiums to better reflect flood risks and limit repetitive loss payments. But they have encountered ferocious pushback in Washington from real estate agents, homebuilders and other development interests, as well as politicians representing areas that tend to go underwater.

[...]

In Hannibal, Missouri, the Mississippi River reached its 10-year flood stage in seven out of the eight years between 2008 and 2015, which would be a one-in-a-million coincidence if it were really a coincidence. Cities as diverse as Miami, St. Louis and Sacramento face a constant risk of becoming the next Houston or New Orleans.

[...]

“This isn’t the storm of the millennium,” Conrad says. “It’s going to happen again and again.”

And just to be complete, and fair, it's not just the housing/building market that's in this business. It's also big agriculture. Acres upon acres of farmland in California is in flood plains, with the same kind of federal bail-out insurance. Those guys are making boatloads (no pun intended) of money off that deal. Not to mention the fact that they can acutally collect federal money for NOT planting those acres.  At least, with agriculture, however, thousands of people aren't left homeless or dead.

...but hey, do what you want...you will anyway.

UPDATE:

Well, that sounds good, but it doesn't address the problem of paving over bayous and areas that would normally absorb or contain flood waters.  Once that's done, it just forces water out onto more acreage.  Building should be prohibited in those areas.  If that means building up in other areas instead of out, so be it.  It happens to cities like San Francisco where there simply isn't any more land on which to build out.  They have to go up.  Houston, for instance, is incredibly spread out, with very limited areas of high-rise building.

It also doesn't address having chemical plants and oil refineries in danger zones.