Bringing climate risk home, one property at a time

By the time a homeowner who buys a house today pays off a typical mortgage, there is a good chance they will live in a different climate — one threatened by stronger winds, more frequent floods and bigger wildfires.

For the last two years, homeowners have been able to track those risks on their individual properties through tools created by the nonprofit First Street Foundation.

Now what started as an attempt to help Americans visualize the practical impacts of climate change has become a big business in its own right. 

As part of a broader attempt to visualize future climate risk, insurance companies, federal mortgage managers and consumer financial authorities are partnering with First Street Foundation to bolster the U.S. economy against the rising risk of extreme weather.

Climate exposure represents a serious threat to the U.S. housing market, which may be overvalued by more than $200 billion dollars, according to First Street data published in Nature.

On Wednesday, the Federal Home Loan Mortgage Corporation — better known as Freddie Mac — was the latest to announce that it would join dozens of other federal and private companies in using First Street data to evaluate climate risk to the properties it helps finance.

With more than 30 federal clients — including the Consumer Financial Protection Bureau and the Federal Reserve — and integrations with realty sites Realtor.com and Redfin, First Street’s data seeks to bring the financial impacts of climate change home.

That’s an inherently tough thing to grapple with, founder Matthew Eby told The Hill. Climate change is “this amorphous issue. It's like, the atmosphere is one degree warmer — what does that mean?”

That ambiguity stymies policy action even as public concerns over climate change have gone mainstream, Eby argued.

 “If you understand the science and you talk to the scientists, everyone is very concerned — but when you get to individuals — which is how policy is made in this country — no one thinks it's going to impact them personally.”

First Street grew out of an early-2000s attempt to change that. The project's first iteration connected the impacts of sea level rise on the price of housing.

Housing was a practical choice because a house is “for the vast majority of Americans their most valuable asset,” Eby said. 

That first study found coastal homes in the proximity of tidal flooding were appreciating much more slowly than others that were less threatened — even during the houses-gone-wild period of the early 2000s.

That provided the model for a very successful business based on providing actionable data to everyone from institutional investors and the federal government to individual homeowners.

(To use the free tool to check a property's risks, click here.)

Framing the problem in terms of home values also allowed a practical mechanism for thinking decades in advance. A mortgage typically lasts 30 years, even though few people hold properties that long.

From that perspective, climate change goes from a theoretical problem — however apocalyptically it may be framed — to a practical one. 

For homeowners, “no longer is it a thing that might impact my kids,” Eby said. “It's changing the valuation on my property right now.”

From an initial study of tidal flooding in the Miami area, they expanded to Florida, the coastal states, and then to the U.S. as a whole. 

By that point, Eby’s ambitions had grown. He and his team envisioned a tool that would allow anyone in the U.S. to identify their flood risk today — and how it would change over the next 30 years from sea level rise, changing rainfall patterns and the greater storm surge of the future’s more powerful hurricanes. 

Nothing like that existed at the time. The closest approximation was the hundred-year flood zone maps put out by the Federal Emergency Management Agency (FEMA), which determines who is required by law to buy flood insurance.

That federal dataset had large holes, Ibrahim Almufti of the engineering consulting firm Arup — now also collaborating with First Street — told The Hill. 

It was built on past patterns, not future climate modeling — meaning it was based on the inherent assumption that the floods of the future would be like those of the past. 

It didn’t incorporate flooding from sudden storms, like the deadly floods that scoured eastern Kentucky last July.

And even for properties and zones it did cover, the FEMA data gave a yes-no chance of flooding, without information about how deep floodwaters were likely to get. “The difference between half a foot of flooding and five feet of flooding is enormous, right?” Almufti said.

First also captured risks to surrounding infrastructure — roads, wastewater treatment, parks, schools. 

To build a more complete map, which they called Flood Factor, First Street enlisted more than 80 scientists from nonprofits and universities, who published their research in top journals like Nature.

Their findings were stark: nearly twice as many homes nationwide were exposed to serious flooding than FEMA had predicted.

In other words, they identified about 6 million flood-prone houses that FEMA had missed — homes whose owners largely didn’t carry flood insurance, because they had no idea they needed it.

That round of findings made the front page of the New York Times and Washington Post, and brought First Street and Flood Factor to the attention of the engineering, housing and finance sectors that were beginning to grapple with the financial costs of climate change. 

For example, FEMA data had largely missed the danger of flooding to the Chicago area, a city defined by a complex hydrologic tug-of-war between its sewer system, the Chicago River and Lake Michigan.

The First Street flood data was “the most interesting thing,” said Emily Westendorf of Fifth Third bank, which writes a lot of mortgages in the [Chicago] area. “You just learn things that you never even thought of.”

There was an additional practical benefit, Westendorf said: for these at-risk areas that FEMA didn’t catch, Fifth Third could not easily require home buyers to purchase flood insurance — a potentially discriminatory practice called blue-lining. 

But they could show them the First Street predictions, which led most buyers to purchase insurance of their own accord. 

First Street (now a revenue-generating vendor, rather than a donor-funded research project) expanded from the flood data.

In the summer of 2022, they released Fire Factor, the first national map that allowed homeowners or buyers to easily visualize their risk from wildfire — uncovering 6 million properties with a 1 in 7 chance of experiencing a wildfire over the next 30 years.

Later that summer, they released Heat Factor, which found that the number of Americans living in counties that would experience temperatures above a (potentially lethal) 125 degrees Fahrenheit would reach 107.6 million by 2053— up from about 8.1 million today.

And this February, they found that by 2053, hurricane winds would threaten 13.4 million properties that currently don’t experience such risks. Many of the newly threatened houses would be unexpectedly deep into the interior of the Midwest, Appalachia and the Ohio Valley, First Street chief data officer Ed Kearns told The Hill.  

Unexpected danger, Kearns argued, meant magnified danger: “People in Tennessee or Kentucky aren't expecting hurricane conditions, so they’re not prepared for them.”

People also didn’t really understand that that danger was largely set, no matter what climate actions we take today — at least over the 30-year time scale, Kearns added. 

"This is one of the hardest things to communicate to people," Kearns said: for the impacts over the next 30 years, “the train has left the station.”

The world after 2050 will look dramatically different depending on decisions made today — as the rising dangers of First Street catalogs could have been lessened by aggressive climate action in the 1990s or 2000s, as scientists began sounding the alarm.

That fixed near-term path has helped guide some climate responses while stymieing others. 

For actuaries and financiers, the new data, from First Street and others, has led to heightened interest in how they can avoid — or profit off — future dangers and migrations.

"They care about where people are going so that they can start building the next housing market and the next developments that need to go with it so that they can make money off that," Eby said.

And it is also leading regulators in the federal government, at agencies from the Securities and Exchange Commission to the Office of Comptroller of the Currency, to begin requiring banks and lenders to audit and defray their climate risks.

But for all its financial success, and as much as the climate conversation in America has changed in the two decades since First Street launched, the company hasn’t cracked the larger question of how to make people — and policymakers — care enough about the data to make different choices. 

Instead, institutions are adapting themselves to their near-term map of the future, rather than creating a long-term different one. 

“No individual action is going to solve this. It has to be policy-driven and government-driven for [global heating] to be mitigated,” Eby said.

Even as modeling and financial regulation are improving, and despite massive stimulus spending on clean energy, the long delay between action and effect — between a livable or a horrifying back half to the 21st Century — keeps climate policy stuck in the same Catch-22 it was in the 2000s, he argued. 

“You need public support for the government to take action — but then the public is going to say, ‘what do you mean? For something that's 30 years down the line?” he said.

“If there has ever been a marketing problem, this is a heck of one to try and sort out.”