CEO of real estate broker Redfin told CNBC on Friday that he believes there has not yet been a serious calculation among U.S. home buyers about the dangers of climate change.
“Buyers continue to march toward the jaws of destruction,” Redfin’s Glenn Kelman said in an interview with Closing Bell.
The forest fire season in the American West is getting 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 increase in ferocity due to global warming and rising sea levels.
Kelman said homebuyers in vulnerable parts of the country are not deterred by these realities. “Buyers themselves are motivated by affordability and the most affordable places in America are the ones most at risk of being affected by climate change,” the executive said. “They will be flooded by hurricanes. They will be affected by forest fires.”
“If you look at where people are moving, they’re heading to Florida and the southeast, especially prone to flooding, and they’re at an incredible risk of heat 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 United States, eclipsing Philadelphia, according to recently released data from the 2020 census, after the capital Arizona grew faster than any other major U.S. city in the past decade. Located in the Sonoran Desert, Phoenix has long been known for its heat, but experts say it is likely to be 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 noted a recent Redfin analysis that found that more than a third of households in Utah face what the company classifies as “high fire risk.”
“I think this idea that climate change will be taken into account in the way people think about housing, has not yet happened. The only people who have discovered it are the actors, the people who have to calculate the cost of the insurance of these properties. ”said Kelman, who has run Redfin for about 15 years.
“It will be harder and harder to get insurance, it will be harder to get a loan for these properties because lenders will see the writing on the wall that this collateral is in jeopardy,” he added.
Natural disasters are expensive. In January, insurance company Munich Re estimated that the record number of hurricanes, forest fires and floods last year amounted to $ 210 billion in damage worldwide.
Kelman’s comments Friday come as several U.S. regions face weather disasters. In California, crews are battling a pair of massive flames, known as the Caldor and Dixie fires, which are the second largest in state history. Forest fires have prompted thousands of residents to evacuate their homes.
Other parts of the United States are dealing with the aftermath of Hurricane Ida, which made landfall Sunday in Louisiana. At noon on Friday, about 850,000 utility customers were left without electricity, according to the State Public Service Commission.
Ida, after weakening in a tropical storm, headed north and eventually hit mid-Atlantic and northeastern states such as Maryland, New Jersey, and New York. New York City recorded record rainfall Wednesday night and the floods it caused demonstrated the vulnerability of infrastructure in the country’s most populous city to climate change.