Helping Servicers, Borrowers Assess Weather Risk

Mortgage lenders and financial servicers who are better prepared for climate-related disaster are positioned to anticipate and accelerate local economic recovery and protect homeowners, and, by extension, to protect scheduled housing payments, DS News learned while listening in on Corelogic's recent "Winds of Change" webinar.

To that end, the data team at real estate brokerage Redfin has announced that it will begin publishing region-by-region data from ClimateCheck which rates climate-risk from 0-100 by county, city, neighborhood, zip code. The information will help not only mortgage financers and servicers but also homeowners, homebuyers, and renters understand and prepare for weather-related fire, heat, drought, and storm perils, according to Redfin Chief Growth Officer Christian Taubman. 

"A home is a huge financial investment, and these days consumers are seeing all too many examples of climate-related risks like fires, floods and heatwaves," Taubman said. "By bringing ClimateCheck's data to every location page on Redfin.com, we're making it easy for consumers to make better-informed decisions about buying, selling, and renting."

ClimateCheck's ratings are based on an area's future risk and how much that risk will change over time, and they project future risk for climate-related hazards by using dozens of internationally accepted global climate models that assume a conservative, worst-case scenario for the continued release of CO2 into the atmosphere.

The company then personalizes these global models to the local level across the U.S. with a technique called downscaling, which combines global projections with observed local weather patterns. It projects a higher risk for areas expected to experience more dramatic changes—compared to ones already experiencing such hazards—as this reflects the challenges and cost of adjusting to climate change and the increased stress on local infrastructure.

An example of recent property-data analysis based on ClimateCheck data was a report showing a surprising trend—areas with the highest climate-related wildfire risk included many metros with the fastest population growth. ClimateCheck forecasted that 9.3 million acres nationally will be burned each year by 2050. Of the 20 areas identified in the study as carrying the highest risk of fire, more than half have growing populations and six are in the top 15% of the nation’s fastest-growing counties.

Leaders at ClimateCheck and Redfin suggest that more-specific data will help homebuyers make more-informed decisions. Says Principal Cal Inman, "Redfin is taking the global climate challenge down to the local level where people are struggling to figure out the consequences of dramatic weather and climate events."

A survey Redfin conducted earlier this year revealed about half of respondents who plan to move in the next year said extreme temperatures and/or the increasing frequency or intensity of natural disasters played a role in their decision to relocate. Another one-third said rising sea levels played a role. Nearly 80% of 2k respondents said that increasing frequency or intensity of natural disasters in an area would make them hesitant to buy a home there. A slightly lower share—about three-quarters—would be hesitant to buy a home in a place with extreme temperatures and/or rising sea levels. For existing homeowners, more than one-third said they had spent at least $5,000 fortifying their homes against climate threats.

A study by Helitech in June also examined the ways property owners prepare for and react to risky weather conditions and the damage that tends to ensue. From 1,000 respondents, they learned that about three in five people consider potential severe weather events before moving to a new place. Respondents reported spending an average $150 per year to prepare for severe weather and $420 on home repairs after a disaster occurs.