Sound Investments for a prosperous planet

How to Consider Climate Change Risk on Real Estate

When I wrote “Location. Now More Than Ever” in 2016, the cliché about “location, location, location” still referred to issues like good schools, close to work, and near family. Clearly these are still important criteria in real estate, but now add to the list: is it a region with high or low climate change risk?

From a climate perspective, the last six years have been intense: millions of acres of California and the West have burned; floods have swamped Houston, the Midwest, and the Gulf Coast; hurricanes have removed several towns in Florida; and epic ice and snow annually bury the Northeast. The biggest killer, though, is heat, averaging more than 1,000 fatalities a year in the U.S., according to the CDC. All of this will be worse in 30 years.

For many of us, real estate is the biggest piece of our net worth so getting it right is crucial.

When I wrote “looming” in 2016 I was thinking a bit further into the future, but clearly the future has arrived, and the change has come. We need to adapt. Thankfully we have more resources than we did just six years ago. Redfin, for example, now has a section on climate risk by property. When you’ve selected a property page in Redfin, scroll down to the Climate Risk section. and also provide a numerical rating of flood, storm, drought, heat, and fire. The flood data also includes the FEMA flood zone. A warning, though, when using FMEA’s NRI — a recent Washington Post investigation published December 2022 showed FEMA’s maps are failing to warn Americans about flood risk.

Each risk area is scored from one to 100, with the higher numbers reflecting greater risks. ClimateCheck developed these scores based on a methodology that includes data and modeled frequencies of events through 2050. Going directly to ClimateCheck is also helpful, providing a customized, 30-page report about a property. Still relevant though not mentioned is earthquake, always looming here in California. ClimateCheck has also created overviews of climate risk by region that should be helpful if you’re considering a more wide-ranging relocation.

I reviewed the report for my property and the highest risk is from big storms and the lowest risk is drought. Considering that we’re in a drought right now and more than a mile and 50 feet up from the nearest river, I was surprised. Digging into the details of the report, the rising risk of pluvial flooding (from extreme rainfall) is what’s highlighted. I would recommend studying the details to see what generates the rankings.

Armed with this data, the question still stands: should I stay where I am with its known risks, or move to another area with a different mix of theoretically lower risks? I think the answer to this question is easy for some properties and more challenging for others.

For example, anywhere right on the coast is untenable. The wildland urban interface, or WUI as it’s called, a zone of transition between wilderness and land developed by human activity, and an area where so many people love to live, is at risk of catastrophic wildfires. More frequent days above 90 degrees are going to make most of Arizona and West Texas suffocating. And forget about straddling an earthquake fault!

climate change risks
“Very often, you hear people say, ‘I don’t have to worry about climate change because I am 60 or 70 years old — this is a problem for my grandkids.’ I greatly disagree with that statement. Climate change is here, and it is affecting all of us.”- Dr. Ed Kearns, chief data officer of First Street Foundation (the nonprofit that developed Risk Factor)

But after avoiding these major issues, the answer becomes more nuanced. There’s now loads of data to mine, maps to orient, scores to rank and prioritize. You then have a new hazard: drowning in data. FEMA’s National Risk Index (NRI) attempts to cut through the complexity by bringing all these factors together to divide the U.S. into five tranches of risk – Very High, Relatively High, Relatively Moderate, Relatively Low, and Very Low.
FEMA’s NRI includes annual estimated loss from even more risks (avalanche, volcanic activity, lightning, etc) combined with social vulnerability and community resilience to generate its ranking. Select Census Tract View for the most nuance. The Great Lakes and New England are looking pretty good!

Perhaps there’s an easier way to think about this. After looking at several dozen ClimateCheck scores on Redfin, it’s clear that most locations are going to experience more precipitation, more wildfires, more flooding, and more heat. If you’ve managed to avoid the big challenges mentioned above, can you handle more rain and more heat where you are? Can you survive a rare wildfire or earthquake? Can you, or do you want to, further prepare for more of the risks that your region is already experiencing?

For many, an increase of hot days from 10 to 20 per year is likely not significant enough to require a move. But a doubling of wildfire or flooding risk might be. Think through your most prominent risks, how you might reduce them, and if that reduction is cost effective or if relocation might be prudent.

There are adaptations to all the risks mentioned. ClimateCheck recommends increasing the durability of your home from fire by using non-combustible materials and limiting the amount of available fuel sources near your home. As for flooding, it recommends lifting or moving your home – I’m sure that’ll be cheap!

And then there are those who choose to tolerate the risks. In Tucson, for example, people already stay inside for most of a summer day. Whatever you decide to do, the online tools at least make it easier to plan for the future.

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