Buyers don’t worry about climate change: Redfin CEO
The CEO of real estate brokerage firm Redfin told CNBC on Friday that he believes there is not yet serious consideration among U.S. buyers of the dangers of climate change.
“Buyers continue to walk in the mouths of destruction,” said Glenn Kelman of Redfin in an interview on “Closing Bell.”
The wildfire season in the American West is getting longer and more intense due to human-induced climate change, fueled by warmer temperatures and drier conditions. Likewise, scientists say, hurricanes and floods are increasingly fierce due to global warming and rising sea levels.
Homebuyers 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 most likely to be affected by climate change,” he said. “They are going to be flooded by hurricanes. They are going to be affected by forest fires.”
“If you look at where people are moving, it’s towards Florida and the Southeast, which are particularly prone to flooding and also pose an incredible heat risk as temperatures rise. And they’re also moving towards places like Phoenix, Las Vegas and Utah, ”Kelman says.
Phoenix is now the fifth-largest city in the United States, eclipsing Philadelphia, according to recently released 2020 census data, after Arizona’s capital grew faster than any other major American city during the last decade. Located in the Sonoran Desert, Phoenix has long been known for its heat, but experts say it is likely to become more extreme due to climate change.
Utah’s population grew by more than 18% between 2010 and 2020, making it the fastest growing U.S. state during that time period, according to the Census Bureau. Kelman pointed to a recent Redfin analysis that found more than a third of Utah homes face what the company calls “high fire risk.”
“I think this idea that climate change is going to be factored into the way people think about housing, that hasn’t happened yet. The only people who have understood are the [actuaries], the people who have to calculate the cost of insuring these properties, ”said Kelman, who led Redfin for about 15 years.
“More and more, it’s going to be more difficult to get insurance, it’s going to be more difficult to get a loan for these properties because the lenders will see the writing on the wall, that this collateral is in danger” , he added.
Natural disasters are expensive. In January, insurance company Munich Re estimated that the record number of hurricanes, wildfires and floods last year caused $ 210 billion in damage worldwide.
Kelman’s comments on Friday come as several parts of the United States grapple with weather disasters. In California, crews battle a pair of massive fires, known as the Caldor and Dixie Fires, the latter of which is the second largest in the state’s history. Forest fires have prompted thousands of residents to evacuate their homes.
Other parts of the United States are grappling with fallout from Hurricane Ida, which made landfall in Louisiana on Sunday. As of noon as of Friday, nearly 850,000 utility customers remained without power, according to the state’s Civil Service Commission.
Ida, after weakening in a tropical storm, moved north and struck the mid-Atlantic and northeastern states, including Maryland, New Jersey and New York. New York City recorded record-breaking precipitation on Wednesday night, and the resulting flash floods demonstrated how vulnerable the country’s most populous city’s infrastructure is to climate change.