Real estate brokerage CEO Redfin told CNBC on Friday that he believes US homebuyers have not seriously anticipated the dangers of climate change.
“Buyers just keep marching down the jaws of destruction,” Redfin ‘s Glenn Kelman said in an interview with Closing Bell.
The wildfire season in the American West is getting longer and more intense due to man-made climate change fueled by warmer temperatures and drier conditions. Similarly, scientists say, hurricanes and floods are increasing in severity due to the warming of the planet and rising sea levels.
Home buyers in vulnerable parts of the country are not deterred by these realities, Kelman said. “Buyers themselves are driven by affordability, and the most affordable places in America are the places hardest hit by climate change,” he said. “You will be inundated by hurricanes. You will be affected by forest fires.”
“If you look at where people are moving, then to Florida and the Southeast, which is particularly at risk of flooding and also poses an incredible risk of heat when the temperature rises. And they’re moving to places like Phoenix, Las Vegas and Utah too, ”Kelman said.
Phoenix is now the fifth largest city in the US, according to recently released 2020 census data, dwarfing Philadelphia after the Arizona capital has grown faster than any other major American city over the past decade. Located in the Sonoran Desert, Phoenix has long been known for its heat, but experts say it is likely to get even more extreme due to climate change.
Utah’s population grew more than 18% between 2010 and 2020, making it the fastest growing US state during that period, according to the Census Bureau. Kelman pointed to a recent Redfin analysis that found that more than a third of Utah homes are related to what the company classifies as “high fire risk.”
“I think this idea that climate change is going to get people thinking about housing has not yet happened. The only people who have found out are them [actuaries], the people who need to calculate the cost of insuring these properties, “said Kelman, who has headed Redfin for about 15 years.
“It’s getting harder and harder to get insurance, it’s getting harder to get a loan on these properties because lenders will 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 that the record sum of hurricanes, forest fires and floods last year resulted in losses of 210 billion US dollars worldwide.
Kelman’s comments on Friday come as several regions in the US are grappling with weather disasters. In California, crews are fighting a pair of massive fires known as the Caldor and Dixie Fires, the latter of which is the second largest in the recorded history of the state. The forest fires have caused thousands of residents to evacuate their homes.
Other parts of the United States are grappling with the aftermath of Hurricane Ida, which hit land in Louisiana on Sunday. According to the state commission for the public service, almost 850,000 utility customers were without electricity by Friday noon.
Ida, after weakening to a tropical storm, headed north and hit mid-Atlantic and northeastern states including Maryland, New Jersey, and New York. New York City saw record rainfall Wednesday night, and the resulting flash floods showed how vulnerable the infrastructure in the country’s most populous city is to climate change.