Flood risks are impacting homebuyers at higher rates than any other climate risk, a new study shows.
Zillow partnered with ClimateCheck to conduct an analysis. They found that areas with increased flood risk also see an increase in mortgage denials. In addition, more borrowers withdrew their mortgage applications in these areas, even after controlling for income and property value.
The rate of both denials and withdrawals in areas of high flood risk are higher than in 2017. They are also higher than in areas at risk of other climate events, according to the study.
Still, home values in areas of high flood risk are growing faster than in other areas. This means buyers are still willing to take on the risk—and pay more for the privilege.
Risks associated with other climate events — fire, drought, heat and storms — are having little to no effect on mortgage lending, the study showed.
The analysis also found that home buyers prefer to purchase investment homes in high-flood-risk areas rather than primary residences.
Down payments also tend to be smaller in areas with higher flood risk, Zillow said.