Zillow Deleting Home Climate Risk Scores Reveals Limits of Flood, Fire Data

Core Viewpoint - Zillow Group Inc. has removed climate risk scores from its home listings, which has raised concerns among observers about the implications of this decision on property risk awareness and market pricing [1][5]. Climate Risk Assessment - Homeowners and buyers require knowledge of their properties' vulnerabilities to extreme weather events like wildfires and flooding, as traditional federal and state maps are often outdated [2]. - A study by the Climate Financial Risk Forum found significant discrepancies in climate risk ratings for the same properties from different companies, indicating a lack of standardization in risk modeling [3]. - Risk modeling is still an emerging field, and it may take time for consistent norms to be established [4]. Market Implications - The removal of Zillow's climate risk scores could lead to mispricing of real estate assets, as oversimplified or inaccurate climate impact projections may distort market values [5]. - The California Regional Multiple Listing Service expressed concerns over properties being rated with high flooding probabilities despite historical data showing no flooding [6]. Industry Trends - The demand for climate risk information is increasing as climate disasters become more frequent, prompting companies like Moody's, S&P Global, and CoreLogic to develop or acquire climate-risk products [7]. - First Street, the company behind the scores Zillow used, acknowledges the complexity and uncertainty inherent in climate risk models, especially when localized to specific properties [8]. Risk Model Limitations - First Street's risk scores focus on estimating a structure's exposure to hazards over a 30-year period, rather than predicting potential damage, highlighting the need for clarity in what these scores represent [12]. - The relationship between physical hazards and the built environment is crucial in understanding actual risk, as various structural factors can influence vulnerability [10][9]. Recommendations for Improvement - There is a call for public models to provide a benchmark for evaluating private risk assessments, as seen in Florida's public hurricane catastrophe model [13]. - Standardizing climate-risk data approaches could enhance market trust and ensure accurate home pricing, although the specifics of model output disclosure remain unclear [14].