Global Warming as a Homebuyer’s Nightmare
Raging wildfires cropping up in unexpected places, tornadoes setting down where they had never set down before, and flooding after torrential rains simply had not played a significant role in housing transactions—until now. All that changed dramatically with climate change, though few are aware of it. Lenders, insurance companies and appraisers are crunching numbers and see an increase of violent storms, wildfires, floods, droughts and extreme heat from a perspective of valuation, as they have to, because these affect property values and maintenance costs in a dramatic way.
Water damage can be costly and difficult to repair, sometimes compromising the very foundation of your house. Roof, siding and windows are prone to damage from high winds. Flooding and wildfires have destroyed entire communities on the West Coast of late. Know your risk before buying. A lack of knowledge about climate risk makes it difficult for buyers to recognize that their home could be more costly to maintain, more expensive to insure, and more exposed to damage and possible destruction from a storm or fire than you had ever imagined in your calculations.
Most assuredly your agent has looked at FEMA maps for flooding danger, which may be why you may not be able to have flood insurance at all from private sources. That means that property overlooking water, however magnificent now in value, may become worthless in a day. There is evidence that found that less than 10 percent of buyers know that a house is in a flood plain before they make an offer. Researchers have even found that homes with a high risk for flooding sold for a premium of 13.6 percent more than homes with a low risk for flooding during the first quarter of 2021, an increase substantially greater than in any other year.
Banks as underwriters worry that climate change with its increase of mortgage default rates, will reduce house prices in areas prone to crisis, thereby producing climate-related patterns in sales, as people choose to move away from areas with high risks from fires, floods and storms, leaving behind less desirable communities lowering property values in a dramatic way.
Sellers are not always required to share information about risks associated with natural disasters or previous damage. You need to do your own knocking on doors and online research. Home buyers can now look up flood risk and climate scores, on sites such as Redfin and Realtor.com to establish risk from floods, fires and storms. Much depends on it.