Home listings now come with their climate risks

Just yesterday, Zillow introduced a new feature in partnership with the climate change nonprofit First Street that marks for-sale listings across the country for flood, wildfire, wind, heat, and air quality hazards. In an analysis, Zillow found more new listings last month came with major climate risk than homes listed for sale five years ago.

More than half of all new listings of existing homes in August had a major risk of extreme heat, a third had a major risk of extreme wind exposure, close to 17% had a major risk of wildfire, 13% had a major air-quality risk, and almost 13% had a major risk of flooding, according to the analysis authored by its chief economist. 

So not only do we have a housing crisis resulting from a shortfall of homes, but we have an insurance crisis, too—one that is especially acute in California and Florida, where home insurers are capping policies, refusing to write new ones, or simply fleeing. It’s because of the ever-expanding costs and risks from extreme weather or weather-related events.

And by the way, climate risk and its potential catastrophic consequences on homes matter for banks, too: a recent report from First Street found America’s small banks could face destructive losses from weather-related disasters as property damages eat into their portfolio values. 

In the Riverside metropolitan area, more than 70% of new listings in August had a major wildfire risk; and in San Francisco, it’s a little less than half of all new listings last month. Not to mention, in Jacksonville, Phoenix, San Diego, and Denver, more than a third of their new in August flagged major wildfire risks. 

Since Riverside has a wildly intense wildfire risk, and we know how destructive wildfire season in Southern California can be, let’s take a look. 

Zillow

For one, it’s very red, indicating a strong likelihood of wildfires. I clicked on one of the many red dots and found a three-bedroom, two-bathroom house. Its fire factor score is 10 out of 10, an extreme risk; and its heat factor is a six out of 10, a major risk.

Once you click on the fire factor score, it tells you wildfire insurance is critical and you might even need a separate policy. It also says there have been 88 large wildfires within 20 miles since 1984. 

Zillow

This year alone, it predicts the home has an almost 3% chance of being in the midst of a wildfire. That goes up to 41% in 15 years and 68% in 30 years. Given the sheer popularity of the 30-year fixed mortgage rate and the potential of the home being your forever home, that’s scary. The listing advertises a $20,000 price cut as of yesterday, so its asking price is $599,900 at the moment. 

The analysis also found that the New Orleans metropolitan area had by far the greatest share of new listings at major flood risk, close to 77%; and more than a quarter of new listings in August in Houston, Miami, Tampa, and Virginia Beach had a major flood risk as well. 

So let’s take a look at New Orleans this time. There are some very blue areas on the map, which indicate the likelihood of flooding, and the potential depth of flooding the darker it gets. One of the listings—a four-bedroom, four-bathroom house—has a nine out of 10 flood factor score, making it an extreme risk. In the next 30 years, it has a 99% chance of flooding. Again, scary. That home was listed for sale two years ago for $550,000. It has been removed and relisted, and its price has dropped to $489,000.

Zillow

Here’s the thing. It might be good to know this stuff, but Amy Bach, the cofounder and executive director of United Policyholders, a nonprofit that advocates for insurance consumers, once told me the rise of technology that filters out higher-risk properties basically makes it easier for insurers to decline coverage. And an uninsurable home isn’t great.