How to Use Climate Risk Data When Buying a Home: A 2024 Guide

Climate risk data is now a critical tool for home buyers, with over 80% of shoppers considering these factors. This information, integrated into major real estate listings, helps you assess a property's vulnerability to floods, wildfires, and extreme heat over a 30-year period, directly impacting insurance costs and long-term safety. Understanding a property's climate risk is essential for making an informed purchase and planning for associated homeownership expenses.

What Is Climate Risk Data in Real Estate?

Climate risk data provides a property-specific assessment of potential exposure to environmental hazards. For home buyers, this typically includes risk ratings for five key categories: flood, wildfire, high wind, extreme heat, and poor air quality. The data, often supplied by specialized firms like First Street, includes historical event history and forward-looking models that incorporate climate change projections. The primary value for a buyer is the ability to estimate future insurance premiums and potential maintenance costs related to these risks before finalizing a purchase.

How Do You Find and Interpret Climate Risk Scores?

On for-sale listings, look for a dedicated "Climate Risks" section. Here, you will find detailed ratings for each risk category. These scores are often presented on a color-coded scale (e.g., low to high risk) and are specific to the parcel of land the home is built on. On interactive map views, you can often overlay these risks to see how a neighborhood is affected. It is crucial to click into each category to see the projected likelihood of an event over the next 30 years. This detailed view helps you compare properties and understand the specific nature of the threat, whether it's from a river flooding or wildfire.

Why Is This Information Critical for Homeowners?

The typical homeowner stays in their home for about 15 years, making long-term risk planning vital. A high climate risk score can translate into significantly higher costs.

• Insurance: Homes in high-risk flood or wildfire zones often require separate, expensive insurance policies beyond standard homeowners insurance.
• Energy Costs: Properties prone to extreme heat may lead to higher cooling bills.
• Resale Value: While demand can remain strong in desirable coastal areas, a high risk score can affect mortgage approvals and future buyer interest. Knowing these risks allows you to budget accurately and avoid financial surprises.

How Accurate and Reliable Is the Climate Data?

The climate risk information provided on real estate platforms is based on scientific models developed by climatologists and data scientists. These models undergo peer review and are continually updated with the latest climate research. It is important to understand that this data is different from official government designations. For example, First Street's flood model assesses 30-year risk from multiple sources (rain, rivers, storm surge) while factoring in climate change, whereas FEMA flood maps primarily determine federal insurance requirements and may not account for future rainfall intensity. Both are valuable but serve different purposes.

What If a Home Has a High Climate Risk?

Buying a home with a high climate risk is a personal decision that balances affordability, location preferences, and risk tolerance. If you are considering such a property, take these steps:

1. Get Detailed Insurance Quotes: Contact insurance agents to understand the exact cost of required flood or fire insurance.
2. Discuss Mitigation with Your Agent: A knowledgeable real estate agent can outline local mitigation efforts, such as community flood defenses or fire-resistant landscaping requirements.
3. Review Available Resources: Organizations like First Street offer guidance on how to lower insurance costs through specific home improvements for flood, wildfire, wind, air, and heat risks.

It is also important to note that risk can vary significantly even within a small area. Two neighboring homes can have different flood risks due to differences in elevation. Always evaluate the risk score for the specific property, not just the general area.

Key Takeaways for Home Buyers:

• Always check the climate risk section of any online listing you are seriously considering.
• Factor the cost of specialized insurance into your overall homeownership budget.
• Use the data to compare properties and ask informed questions about long-term resilience and costs.
• A high risk score does not automatically mean you should not buy, but it means you must go into the purchase with a clear financial plan.