Insured losses for Hurricane Helene are now estimated at over $6 billion, but uninsured losses are far greater. That’s because the vast majority of homes affected by the storm, especially in northern hard-hit North Carolina, did not have flood insurance.
New risk assessment technology is designed to help change that for the future.
Most homeowners in North Carolina do not have flood insurance because they are not located in flood zones designated by the Federal Emergency Management Agency. Government-backed mortgages require flood insurance in these designated areas.
Just 4% of homes in North Carolina are in a FEMA flood zone. But climate risk firm First Street, which incorporates the effects of climate change into property risk scores, shows nearly 12% of homes in the state are at risk of flooding.
First Street has just released a climate risk data suite for every listed property for sale Zillow.
“Climate risks are now a critical factor in home buying decisions,” Skylar Olsen, Zillow’s chief economist, said in a statement. “We provide buyers and sellers with clear climate data for specific properties so they can make informed decisions. As concerns about flooding, extreme temperatures and wildfires increase, this tool also helps agents inform their clients about the climate debate risks, insurance, and long-term affordability’.
A home along the Broad River in the aftermath of Hurricane Helene on October 1, 2024 in Bat Cave, North Carolina.
Sean Rayford | Getty Images
Every listing for sale on Zillow now displays First Street Hazard Ratings for flood, fire, wind, air and heat. They also show the same risk rates calculated 15 years and 30 years into the future—the typical lengths for fixed-rate mortgages.
In properties with some risk now, it often shows that risk increases over time as First Street incorporates the effects of climate change. This is especially true for the risk of flooding, because climate change is already intensifying the intensity of rainfall, even in small storms.
The data also includes a recommendation on whether the homeowner should have flood insurance and a link to First Street’s website to help estimate insurance costs.
“A lot of people think they’re safe from flooding if they’re not in a FEMA flood zone, and that’s definitely not true. Heavy rains can affect many, many people across the country, and there’s no indication that the FEMA flood zone specifies that’s a risk to you,” said Ed Kearns, chief scientific officer at First Street. “We’ve created these new flood maps that take that into account, which will allow consumers to make that informed choice about whether they need flood insurance.” .
More than 80% of buyers now consider climate risk when buying a home, according to a Zillow survey. Respondents ranked flood risk as their highest concern, followed by fire.
A Zillow analysis of August listings found that more homes nationwide were at significant climate risk than were listed for sale five years ago. This was true for all five climate risk categories, the analysis found. For new listings in August, 16.7 percent are at high fire risk and 12.8 percent are at high flood risk, according to data from Zillow and First Street.
As more consumers consult these climate ratings in their purchasing decisions, the effect on home values is sure to increase. The cost of insurance is already factored into home prices, and as both the cost and the necessity of insurance increase, home values in the hardest hit areas will fall.
“I think this will be the most direct impact of the rating on homes that quantify the risk is that there may be some direct impact on property values, but a lot of that will go through the amount of insurance needed to cover that home” , Cairns added.