Current estimates of insured losses from Hurricane Helene exceed $6 billion, but uninsured losses are much higher. That’s because the vast majority of homes affected by the storm, especially in hard-hit North Carolina, don’t have flood insurance.
New risk assessment techniques aim to help change the future.
Most homeowners in North Carolina do not have flood insurance because they are not in a FEMA-designated flood zone. Government-backed mortgages require flood insurance in these designated areas.
Only 4% of homes in North Carolina are in FEMA flood zones. But climate risk firm First Street, which incorporates the effects of climate change into its property risk scores, shows nearly 12% of homes in the state are at risk of flooding.
First Street just launched a suite of climate risk data for every property listed for sale Zillo.
“Climate risk is now a key factor in home buying decisions,” Zillow chief economist Skylar Olsen said in a press release. “We provide buyers and sellers with clear, property-specific climate data so they can make informed decisions. . The tool also helps agents inform clients about climate risks, insurance, and long-term affordability as concerns grow about flooding, extreme temperatures and wildfires.
A house along the Broad River after Hurricane Helene in Batcave, North Carolina, on October 1, 2024.
Sean Rayford | Getty Images
Every listing for sale on Zillow now displays First Street’s flood, fire, wind, air and heat risk scores. They also show the same risk percentage expected 15 and 30 years into the future – the standard term for a fixed-rate mortgage.
For properties that currently present some risk, it is often shown that the risk has increased over time as First Street incorporates the effects of climate change. This is especially true for flood risk, as climate change has increased the severity of rainfall, even for small storms.
The data also includes recommendations on whether homeowners should purchase flood insurance and a link to the First Street website, which will help estimate insurance costs.
“Many people believe that if they are not in a FEMA floodplain, they will not be affected by flooding, but that is absolutely not true. Heavy rainfall can affect many, many people across the country, and FEMA floodplains Districts have no indication they will be affected by flooding. “We do take this into account when creating these new flood maps, which will allow consumers to make informed choices about whether they need flood insurance. “
A Zillow survey shows that more than 80% of buyers consider climate risks when purchasing a home. Respondents ranked flood risk as their top concern, followed by fire.
A Zillow analysis of homes listed in August found that more homes across the country face significant climate risks than were listed for sale five years ago. The analysis found that this was true across all five climate risk categories. According to data from Zillow and First Street, 16.7% of new home listings in August faced significant wildfire risk and 12.8% faced significant flood risk.
As more consumers refer to these climate scores when making purchasing decisions, the impact on home values is sure to increase. The cost of insurance is built into house prices, and as the cost and necessity of insurance rises, house prices in the worst-affected areas will fall.
“I think the most direct impact of having a quantitative risk score for homes is that there will probably be some direct impact on property values, but a large portion of that will be covered by the amount of insurance necessary to insure the home,” Kearns added.
