Proximity to schools, reasonable commute to work, age of appliances, affordable monthly payment — all top concerns for many prospective borrowers when browsing for-sale listings. But, climate risk?
Weather-wise, buying a home has always been buyer beware. The likelihood a property may experience flooding, wildfires, tornadoes, earthquakes, or thunderstorms — or a combination of those perils — has never been central to homeowners’ conversations with real estate agents and mortgage loan originators about costs of homeownership or long-term affordability.
A recent poll conducted by Mphasis Digital Risk, a mortgage and financial services company, found that rising costs of homeowners insurance have become driving factors for relocation. Rates have risen and coverage worsened in 2024, even after sharp increases in 2023, forcing homeowners to consider and contend with the hidden climate costs that many homes carry.
Homeowners are learning: the monthly payment that pencils out today may not in a year — or two, or five.
A new partnership between Zillow and First Street, a climate intelligence and modeling firm, is directly addressing this challenge, shedding light on unique properties’ exposure to extreme perils in order to help homebuyers assess the long-term affordability of the properties they might like to buy.
For-sale listings on Zillow will now feature detailed climate risk information for five key categories — flood, wildfire, wind, heat, and air quality — directly on listing pages, complete with risk scores, interactive maps, and insurance requirements and recommendations. This feature discloses hidden costs catching millions of homeowners across the U.S. by surprise.
A Need For Climate Risk Disclosures
“Climate risks are now a critical factor in home buying decisions,” said Skylar Olsen, chief economist at Zillow. “We’re providing buyers and sellers with clear, property-specific climate data so they can make informed decisions.”
More than 80% of buyers now consider climate risks when purchasing a home. To date, Zillow is the only listing platform to provide insurance recommendations alongside detailed historical insights showing if and when a property has experienced past perils like flooding or wildfires.
The Federal Housing Finance Agency (FHFA) recently launched its Mortgage Loan and Natural Disaster Dashboard, a tool for homebuyers, real estate agents, loan officers, lenders, and investors to evaluate climate hazards for distinct communities and distinct loans. The tool shows the frequency and financial losses posed by 18 different hazards in relation to loan acquisition counts and total unpaid principal balance (UPB) of loans acquired by the FHFA’s regulated entities within define geographic areas.
Now, when viewing a for-sale property on Zillow, home shoppers will see a new climate risk section. This section includes a separate module for each risk category — flood, wildfire, wind, heat, and air quality — providing detailed, property-specific data from First Street. Each risk is color-coded with its own color scale. Informative labels give more context on climate data and link to First Street’s property-specific climate risk report for full insights.
This section not only shows how these risks might affect the home now and in the future, but also provides tailored recommendations for wind, fire, and flood insurance requirements.
“At First Street we are on a mission to connect climate change to financial risk,” said Matthew Eby, founder and CEO of First Street. “Partnering with Zillow helps us achieve that mission by providing the millions of everyday users on the Zillow platforms with the same property specific climate risk data that is used by top banks, agencies, and investors.”
After Hurricane Debby made landfall in Florida in early August, First Street determined that 78% of the homes that flooded as a result of the storm were located outside the Federal Emergency Management Agency’s (FEMA) flood zones — but 85% of these properties would have received an insurance recommendation on Zillow.
More new listings nationwide in August come with major climate risk than homes listed for sale five years ago, Zillow says. In August, 16.7% are at major wildfire risk, while 12.8% come with major risk of flooding.
“As concerns about flooding, extreme temperatures, and wildfires grow,” Olsen added, “this tool also helps agents inform their clients in discussing climate risk, insurance, and long-term affordability.”
