In real estate, downplaying climate risks won’t make them go away

Tornado Alley is a term traditionally associated with the Midwest, but I lived in Illinois for nearly 30 years and never experienced a tornado until I moved to Atlanta.

In 2008, eight months after I purchased a condo downtown, an EF2 tornado whipped through my neighborhood, causing major damage to buildings less than a mile from my home.

One of the large decorative lights surrounding Centennial Olympic Park is shown blown over and destroyed in 2008. Downtown Atlanta and the surrounding areas were hit by a storm and tornado, and property damage was extensive. (David Tulis/AJC 2020)

I considered it a blessing that my building was spared, but a decade later, I wasn’t so lucky.

Seven months after I purchased a home on Atlanta’s southeast side, Hurricane Irma dropped a tree in my driveway, totaling my car and narrowly missing the house. Maybe I have a knack for buying homes in disaster-prone areas. Or maybe our understanding of disaster-prone areas needs an update.

Either way, when Zillow announced the removal of climate risk data from real estate listings, it felt like a move in the wrong direction.

Last year, Zillow, the largest real estate listing site, began displaying scores that quantified a property’s risk for flood, fire, wind, heat and air quality. But last month, those scores were replaced by a link to First Street, the risk-modeling company where Zillow got its data.

During Hurricane Irma in 2017, AJC columnist Nedra Rhone had a tree come down in her driveway, totaling her car. (Nedra Rhone/AJC 2017)

Zillow had caved to the mighty California Regional Multiple Listing Service, a private database for real estate brokers and clients, after company leaders complained that climate risk data was hurting sales.

“Displaying the probability of a specific home flooding this year or within the next five years can have a significant impact on the perceived desirability of that property,” CEO Art Carter said in an interview with The New York Times.

Um, yeah, as it should … and as do school ratings, walkability scores and other data that homebuyers use to evaluate a 30-year investment. No one is complaining about those other data points because there are ways for homeowners to circumvent bad schools or a lack of green space. It’s a lot harder to outrun climate risks.

Atlanta has its share of major climate threats coming in the next 30 years, according to First Street data. Heat will impact 100% of property owners over the next 30 years with electricity costs for cooling expected to increase by 13.3%. Wind, from hurricanes and tornadoes, is expected to impact 68% of Atlanta homes. And over the next 30 years, 12.8% of properties in Atlanta will experience impacts of major flooding.

That’s general data. Detailed information for any single property is proprietary information that you have to pay for.

In the good old days, when housing inventory was plentiful and the market was flush with buyers trying to outbid each other, no one cared what data was presented to buyers to help them make choices.

But in this still shaky housing market, the call from industry groups to remove climate risk data is a self-serving response.

In November, researchers released a report indicating that flood risk estimates on sites like Redfin reduced by 1% the total sales price of properties at high risk for flooding.

Zillow, in internal research, found that homes with high fire and flood risk scores were less likely to sell than homes with medium or low scores.

Homeowners are not required in many states to disclose information about a property’s climate risk, leaving homebuyers with limited sources of information.

First Street and other companies jumped in with proprietary models that sometimes, as in the case of the California wildfires, made better predictions about climate risks than the public climate data from the U.S. government, which is outdated and possibly in peril given the current administration’s position on climate change.

It is valid for real estate professionals to question the reliability of climate risk data from First Street and other sources, since private companies generally don’t share how they develop the models they use to measure and predict climate risk.

But downplaying climate risk scores doesn’t make climate risks go away. It just puts an additional burden on homebuyers to search for that information — or make one of the most significant decisions of their lives without it.

Homebuyers need to make informed choices about the impact climate risks might have on their quality of life, their ability to get insurance or to sell their homes in the future.