As climate change increasingly impacts North Carolina, prospective homebuyers face a daunting new reality: understanding and navigating the risks associated with property ownership. From the Outer Banks, where coastal erosion is a pressing concern, to the mountainous regions scarred by Hurricane Helene, the risks posed by flooding, fire, and extreme weather events have become critical factors in real estate decisions.
In response to these challenges, Zillow has introduced a feature that provides climate risk data from First Street in for-sale property listings across its platform. This new tool offers buyers detailed risk scores for hazards such as flooding, fire, wind, air quality, and heat, along with forecasts for the next 15 and 30 years -- the standard lengths for fixed-rate mortgages. As climate risk becomes a significant consideration in home buying, Zillow’s initiative aims to empower buyers with vital information that could shape their investment decisions.
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“This tool also helps agents inform their clients in discussing climate risk, insurance, and long-term affordability,” said Skylar Olsen, chief economist at Zillow.
First Street climate risk data is also integrated into listings on Redfin and Realtor.com.
Recent data from Zillow indicates that over 80% of homebuyers now consider climate risk an essential element of their purchasing decisions. Flooding tops the list of concerns, reflecting a growing awareness among buyers that climate-related risks can threaten their investments and safety.
Despite this awareness, many North Carolinians remain unprepared for the realities of climate change. Approximately 4% of homes in the state are situated within FEMA-designated flood zones, leaving a significant majority without flood insurance. This lack of coverage often stems from the mistaken belief that homes outside these zones are safe from flooding. However, data from First Street reveals that nearly 12% of homes in North Carolina are at risk of flooding due to rising sea levels and increased rainfall.
“A lot of people think they are safe from flood if they’re not in a FEMA flood zone, and that’s simply not true,” said Ed Kearns, chief science officer at First Street. He noted that heavy rainfall can have widespread impacts, regardless of official flood designations.
The recent aftermath of Hurricane Helene highlights these concerns, with insured losses from the storm estimated at over $6 billion. Many homeowners affected by the storm were left without flood insurance, exposing a significant gap in preparedness. For instance, in Buncombe County, while FEMA designated only 2,100 properties as high-risk, nearly 19,500 were found to be at risk of flooding.
Experts emphasize that the financial implications of these climate risks are becoming increasingly evident. Jeremy Porter, head of climate implications research at First Street, warned that extreme weather events are occurring more frequently. “One-in-a-hundred-year events are happening every eight years now,” he said, highlighting the growing unpredictability of weather patterns.
As insurance costs continue to rise, the implications for homebuyers are substantial. Franklin Manchester a global insurance strategic advisor at SAS, said insurance affordability is becoming a significant issue. “The protection gap is about $1.9 trillion and it’s growing every day,” he said. “The nature of flood risk, the nature of all risk, is evolving so quickly that what might have been true five years ago is no longer true today.”
Max Dugan-Knight, a climate data scientist at Deep Sky, says the frequency of extreme rainfall during hurricanes has surged by 300%, leading to more real estate transactions falling through as insurers withdraw from high-risk markets. This creates a challenging environment for buyers, who may find it harder to secure financing or insurance for properties deemed too risky.
In light of these evolving challenges, Zillow’s new feature is one of several tools becoming available to help prospective homeowners assess their climate risk before making significant investments. While this resource provides valuable information, experts caution that it is only a starting point.
“For the first time, people have access to climate risk information during the home purchase process, but buyers need to go further and understand the implications for insurance and property values,” he said.
As North Carolinians navigate the increasingly complex real estate market shaped by climate change, it is essential to remain informed about the risks involved. Understanding these factors can empower buyers to make educated decisions, but the evolving nature of climate risks means that vigilance and adaptability will be key as buyers pursue homeownership in a changing landscape.