Trillions of dollars’ worth of real estate is at major risk of damage from flood, fire or extreme wind, a new Zillow (Nasdaq: Z and ZG) analysis finds.
Climate risks threaten trillions of dollars in U.S. real estate, the report from real estate tech firm Zillow revealed.
As stated in the research report, U.S. homes with major wind risk — a risk score of 5 or higher, according to First Street data displayed on for-sale listings on Zillow — are worth “at least $17 trillion in total, equivalent to more than half of the U.S. GDP.”
Homes with major fire risk are valued at “$9.1 trillion, and homes with major flood risk are worth a cumulative $7 trillion.”
Kara Ng, a senior economist at Zillow said:
“The risk of natural disasters and rising insurance costs are profoundly reshaping the housing market. Home buyers are paying attention. With trillions of dollars in real estate vulnerable to these risks, informed decision-making for what is the biggest purchase of many buyers’ lives has never been more critical.”
Eleven major metro areas have at least “$100 billion of residential real estate with major risk of fire, and six of those are in California.”
The Los Angeles metro has the “highest total value of homes at major risk of fire, at $831 billion.”
The New York City metro area stands above “all other major markets with the highest total value of homes at major risk of flood and extreme wind.”
For flood risk, the total value of homes “at risk in New York ($593 billion) edges out Miami ($580 billion), while no other major metro exceeds $300 billion at risk.”
New York homes with major wind risk total “roughly $3 trillion in value, with the value of Miami and Boston homes at risk also exceeding $1 trillion.”
More than 80% of home shoppers “consider climate risks when looking for a new home.”
Still, many high-risk areas remain “desirable and often have higher home values.”
Of homes with extreme flood risk — “a risk score of 9 or 10 — listed for sale in June 2024, the median list price was 22% higher than for homes with minor risk scores of 1 or 2.”
The median list price for homes with “extreme fire risk was 49% higher than homes with minor fire risk.”
Homes with extreme flood risk are worth just “under $2 trillion nationwide, and homes with extreme fire risk are worth a total of $447 billion.”
Home shoppers can explore “climate risk data when browsing listings on Zillow.”
Insights into five key risks — flood, wildfire, wind, heat and air quality — are available “on the search map and directly on for-sale listings, complete with risk scores and interactive maps.”
This information helps buyers and sellers better “evaluate long-term factors affecting homeownership, such as safety, resilience and costs.”
As covered, Zillow Group, Inc. says it is “reimagining real estate to make home a reality for more and more people.”
As one of the “most visited” real estate sites in the United States, Zillow and its affiliates help people find and get the home they want “by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing, and renting experiences.”
As clarified in the update from real estate tech firm Zillow, since some homes may face more than one climate risk, the home values for flood, fire and wind risk should not be combined to create a figure that represents the “total value of residential real estate facing a major climate risk.”