Redfin CEO: Buyers haven’t factored climate change into homebuying
The CEO of real estate brokerage Redfin told CNBC on Friday he believes there has yet to be a serious reckoning among U.S. homebuyers about the dangers climate change presents.
“The buyers just keep marching into the jaws of destruction,” Redfin’s Glenn Kelman said in an interview on “Closing Bell.”
Wildfire season in the American West is becoming longer and more intense as a result of human-induced climate change, fueled by warmer temperatures and drier conditions. Similarly, scientists say, hurricanes and floods are increasing in ferocity due to the warming planet and rising sea levels.
Homebuyers in vulnerable parts of the country are not deterred by those realities, Kelman said. “The buyers themselves are driven by affordability, and the most affordable places in America are the places that are at the most risk of being affected by climate change,” he said. “They’re going to be flooded by hurricanes. They’re going to be affected by wildfires.”
“If you look at where people are moving, it’s to Florida and the Southeast, which is especially flood prone and also has just incredible heat risk as temperatures rise. And they’re also moving to places like Phoenix, Las Vegas and Utah,” Kelman said.
Phoenix is now the fifth-largest city in the U.S., eclipsing Philadelphia, according to recently released 2020 census data, after the Arizona capital grew faster than any other major American city in the past decade. Located in the Sonoran Desert, Phoenix has long been known for its heat, but experts say it’s likely to become more extreme as a result of climate change.
Utah’s population grew more than 18% between 2010 and 2020, making it the fastest-growing U.S. state in that time period, according to the Census Bureau. Kelman pointed to a recent Redfin analysis that found more than one-third of homes in Utah face what the company classifies as “high fire risk.”
“I think this idea that climate change is going to be factored into how people think about housing, it hasn’t happened yet. The only people who have figured out are the [actuaries], the people who have to calculate the cost of insuring these properties,” said Kelman, who has led Redfin for about 15 years.
“Increasingly, it’s going to be harder to get insurance, it’s going to be harder to get a loan for these properties because the lenders are going to see the writing on the wall, that this collateral is at risk,” he added.
Natural disasters are expensive. In January, the insurance company Munich Re estimated the record amount of hurricanes, wildfires and floods last year led to $210 billion in damages across the world.
Kelman’s comments Friday come as multiple regions in the U.S. grapple with weather disasters. In California, crews are fighting a pair of massive blazes, known as the Caldor and Dixie fires, the latter of which is the second-largest in recorded state history. The wildfires have prompted thousands of residents to evacuate their homes.
Other parts of the U.S. are dealing with the fallout from Hurricane Ida, which made landfall in Louisiana on Sunday. As of noon Friday, nearly 850,000 utility customers remained without power, according to the state’s Public Service Commission.
Ida, after weakening into a tropical storm, made its way north and pummeled mid-Atlantic and Northeastern states, including Maryland, New Jersey and New York. New York City saw record rainfalls Wednesday night, and the flash flooding that resulted demonstrated how vulnerable infrastructure in the country’s most populous city is to climate change.
