As global temperatures increase and sea levels rise, home shoppers are looking at more than just location, price and the number of bedrooms when exploring properties. They are also wondering about the risk of natural disaster and what that risk might mean for a home’s value over time.
It is a question that has long been considered by commercial real estate investors, who have tapped into the growing field of climate analytics via companies like Four Twenty Seven and Jupiter Intelligence to get projections on weather-related hazards. But individual homebuyers have traditionally not had access to the same data.
That is now starting to shift, and most resources are available at no cost.
In August of last year, realtor.com became the first major real estate website to disclose data, adding both publicly and privately assembled flood risk information to its more than 110 million listings. Redfin added the same services to 94 million of its listings in February.
The public data, which is sourced from flood maps produced by the Federal Emergency Management Agency, assesses the home’s current risk of flooding based on FEMA flood maps of the general area. The private data offers a long-term projection: Sourced from Flood Factor, a tool created by the First Street Foundation communicates a 30-year estimate of future flood risk via a score of 1 to 10.
“You get a picture of not only what the risk looks like today as evaluated by FEMA, you get this more forward-looking picture of the types of flood events that you might face,” said Danielle Hale, chief economist for realtor.com. Some properties may currently show a low risk for flooding from FEMA but have a higher long-term risk level from Flood Factor.
The group ICLEI — Local Governments for Sustainability, a partner of First Street, also works with more than 1,000 cities on sustainability projects, and many, like Cambridge, Massachusetts, and St. Paul, Minnesota, have developed long-term response plans to climate change that include high-resolution maps depicting risks of fire, sea-level rise and heat.
Citywide and countywide maps are a useful tool for buyers, said Dr. Cody Nehiba, a research professor at the Center for Energy Studies at Louisiana State University, because communitywide action on climate change can protect individual home values.
“Flood maps can help buyers determine the likelihood of their property being damaged in a flooding event and see what infrastructure the community has in place,” he said. “It is important to note that ill-prepared areas that continue to invest heavily in high-risk locations will likely face larger damages from climate change.”
For most people, buying a home is the largest single investment they will make in their lives. And in 2020, the U.S. incurred nearly $100 billion in damages caused by natural disasters. By the year 2100, millions of coastal homes in the United States are expected to be underwater. Buyers need to also prepare for the sticker shock of home insurance rates: Premiums have jumped 59% over the past decade, in large part because of more hurricanes and wildfires. In California and other disaster-prone states, many homeowners are finding they simply no longer qualify for traditional home insurance at all.
“Research shows that homebuyers who are making the decision to relocate are increasingly considering future climate hazards,” said Katharine Burgess, vice president of the Urban Resilience Program for the Urban Land Institute.
Buyers who want to educate themselves on a property’s risk factor, however, should be prepared to do the research on their own. “A seller usually will not be willing to disclose some of the issues you could face as a homeowner of their house,” said Ruth Shin, founder and CEO of Property Nest, a New York-based housing site. “However, it’s important to be aware of weather and climate issues that have affected the area for the past few years.”
It is also important to know the disclosure laws in your state.
Buyers in any state can request a natural hazard report from a third party for around $100. But in California, sellers are required to provide buyers with a Natural Hazard Disclosure Report, which will alert them if the property is in a risk area for floods, earthquakes, wildfire or other hazards.
“If you haven’t owned a home before, you don’t necessarily think about the bad things that could happen post-owning a home,” said John Berkowitz, CEO of real estate technology company OJO Labs.
In early May, OJO Labs launched a partnership with ClimateCheck, a startup that allows users to punch in any address and access a risk assessment across five climate-related categories: drought, fire, storm, heat and flood. OJO Labs is now including that data on all of its listings on movoto.com, its residential real estate search site.
“These things create a change in value and change a risk for this massive asset that you’re buying as a consumer, and whether people are proactively asking for it or not, we think it’s a responsibility to surface it to them,” Berkowitz said.
The risk of climate-related damage is higher for some sectors of the population. A survey on disaster preparedness from Allstate found that women are more likely than men to struggle in recovering financially from a natural disaster. Minority families and low-income households are also more likely to live in areas at risk of climate-related damage, and decades of racist housing policy in the United States have created an inequity of temperature, consigning Black homeowners to neighborhoods with higher temperatures and less shade.
With that in mind, Enterprise Community Partners, a national housing nonprofit, created Portfolio Protect, a tool that offers a risk score for hazards including earthquakes, flooding and landslides. It is free and available for any address in the country.
There are also more in-depth resources available for those willing to pay a fee. CoreLogic, a corporation that provides property data as well as citywide and nationwide scores, offers detailed risk reports with data sourced from mineralogical scientists, climate scientists, engineers and statisticians. Their clients include FEMA as well as insurance companies and mortgage servicers, and reports start at $18.
“We offer risk scores that are at a composite level to tell you the big picture of how at-risk your home is for natural perils,” said Tom Larsen, CoreLogic’s principal of insurance and spatial solutions. “Step one is to know your risk now. It’s granular. It’s at the house level. It’s not going to hit every home the same way.”
As awareness of climate-related hazards grows, the companies crunching those hazards into easily understood projections are only going to get more popular, said Zach Aarons, co-founder of MetaProp, a PropTech venture capital firm.
“You’re on Twitter seeing images of people in their kayaks in the middle of the street, or you’re seeing photos of a sky over San Francisco that looks like the sky on Mars,” he said. “This is a market that is going to continue to emerge.”