Why are climate risk assessments necessary?
Last October, ClimateCheck became the first group to offer a dedicated climate risk assessment tool for U.S. consumers. After putting a property’s address into the tool, users are presented with scores for five different climate risks (heat, storms, flood, fire and drought) based on projections for 2050.
Cal Inman, principal at ClimateCheck, says climate risk assessments provide data homebuyers need to make informed, long-term housing decisions.
“For a lot of us, real estate is our biggest investment, and our retirement,” Inman says. “Risk analysis and due diligence is an important part of that, so climate risk data is an important factor to look at, alongside the structure of your home, the materials it’s made from, its location and price point.”
Assessments, he says, are not solely for the benefit of buyers. By telling homeowners what risks threaten their properties, they can mitigate some of the climate change-related damage they may experience. Solutions include clearing brush near their homes or installing outside air vents that use a finer mesh to prevent embers from blowing into their houses.
“It’s not necessarily ‘Don’t buy here,’” Inman says. “It’s saying, ‘Here’s some risk.’ If you’re aware of the risk, it helps you understand how to protect yourself.”
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Climate risk assessments and home prices
What if a property you purchased receives an alarmingly high climate risk assessment score? Won't that make it inherently less desirable to future buyers and possibly lead to a lower resale price? Not necessarily.
“People make decisions about where to live based on a variety of factors, and a lot of those factors are fundamentally more important, like jobs, where your family lives and where you’d prefer to live,” says Max Steiffel, environmental data scientist at ClimateCheck. “This is just another piece of information that’ll help people make those decisions.”
Steiffel says academic research indicates consumers are not basing their home buying decisions on climate. Despite being slammed with powerful storms, Canadian snowbirds haven't stopped buying properties in Arizona or Florida, two of the most at-risk areas in the U.S.
People also still buy homes in some affluent Calgary neighbourhoods, even though they happen to sit on a well-known floodplain, says Brad Mitchell, CEO of the Alberta Real Estate Association (AREA).
He says climate risk assessments are unlikely to force home prices downward.
“Say you have a house on the beach and you have a climate risk assessment that says sea levels are going to rise by X amount over the next 50 years. You might only be planning to stay in the house for 10 to 15 years,” he says. “I think it’s good information for consumers to have, though.”
Climate risk assessments in Canada
The kinds of climate risk assessments ClimateCheck specializes in aren’t yet available in Canada. But they could be soon.
“We’ve had a lot of interest in the Canadian market, from government-related entities down to homeowners and investors,” Inman says, adding the company is actively working on aggregating climate data for Canada.
The information is important, but whether it makes a difference to buyers or sellers remains to be seen. Mitchell says he hasn’t noticed much demand for climate risk assessments among AREA’s membership, partly because climate risk is seen as a given by many buyers.
“I know that consumers are looking for more data, but I don’t think it’s something people will pay much attention to,” he says. “If you live near a forest, I’m not sure you need a score to tell you that there could be a forest fire.”
That’s solid logic, but a data-driven reminder about the uncertain future facing thousands of properties in Canada may help some homebuyers avoid making a bad decision.
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