Trillions of dollars worth of homes in the United States face major risk of damage from weather events and natural disasters. A new Zillow analysis found that at least $17 trillion worth of homes are at major wind risk, while $9.1 trillion are in significant jeopardy for fire and $7 trillion worth of homes are at risk of major flooding.
Zillow’s study revealed that 11 metro areas have at least $100 billion of residential real estate that faces major fire risk, six of which are in California. Los Angeles has the highest total value of homes that fit this category ($831 billion), driven by a higher average home value of $1.6 million, the highest of any major metro. Phoenix and Dallas have significantly more homes vulnerable to fires, but the total value of danger in those markets is not as high.
New York City is the market most susceptible to flood damage at $593 billion, followed by Miami at $580 billion. No other major metro exceeds $300 billion worth of homes in danger of floods, according to Zillow.
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New York also leads the nation in total value of homes at risk of extreme wind, coming in at $3 trillion, followed by Miami at $1.4 trillion and Boston at $1 trillion. Houston, Philadelphia and Dallas all had more than $700 billion in homes at risk of wind events, and Tampa had $492 billion worth of real estate at major wind risk. No other metro exceeded $400 billion in home value at risk.
In terms of the metros with the highest fraction of homes at risk, Riverside, California tops the list for fire, New Orleans has the greatest share of homes at risk of flood, and Miami is first when it comes to homes at risk of wind damage, said the report.
Zillow also studied the total value of homes with major climate risk in each market compared with local incomes. The report expresses the total value at risk in years of median-income from each homeowner.
Los Angeles faces the highest income burden for fire risk, with the value of at-risk homes equivalent to roughly 13.5 years of cumulative income for each homeowner. The city also had the highest income burden at risk of flooding at 12.7 years, followed by San Jose at 11.7 years and Miami at 11.2 years.
The value of homes at major wind risk in the New York City metro is equivalent to about 8.9 years of total income. The income burden per household is less in the market because of the large number of homes at risk. Pittsburgh’s income burden related to wind damage is 9.1 years, followed by Miami at 8.7 years, Boston at 7.4 years, Providence at 6.7 years and Nashville at 6.4 years.
Overall, Zillow said more new listings are at major climate risk than five years ago, and homes in the most at-risk areas have a lower likelihood of selling and a higher likelihood of selling for less than their original list price. It also found that home shoppers consider at least one climate risk when shopping for a home.
The study relies on risk data from First Street, which ranks climate risk on a scale of one to 10. Zillow calculates the total value at risk by adding what is calls "Zestimates" of single-family or condominium homes with a climate risk of five or higher.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
