By Don Procter

Climate change is an emerging risk affecting the value of real estate, which is why Chris Chopik wrote a 75-page paper on the subject for a degree in the Master of Design in Strategic Foresight and Innovation program at Toronto’s OCAD University.

Chopik’s paper – Property Value in an Era of Climate Change – doesn’t propose any easy solutions but his research raises the need for innovation in the housing industry. And the sales rep for Toronto-based Sage Real Estate says while property owners are the most vulnerable stakeholder, Realtors need to pay heed to the impact global warming has on their business.



“If I sell a house in a flood-prone area and I don’t talk to my client about that potential risk, is there a financial, litigious risk that I am taking?” he asks. It is one of many issues real estate professionals might face.  While answers might depend on many factors, everyone – government, industry and the general public – should take changing climate seriously.

An experienced paraglider, Chopik has observed striking weather changes in the past decade or so while flying high on the foot-launched gliders. “I can relate to it (weather) in a more visceral way than maybe the average person from my paragliding experience and that gives me a framework that has underpinned how I look at the problem.”

He advocates the development of a real estate climate-risk index (REC) – a scientific measurement of sorts that could offer Realtors and potential buyers a “walk score” style rating for “evaluating the climate risk” of properties.

His concept for the REC is based on information he gathered for his paper. It looks at the cost of ownership, including the (de)valuation associated with climate-risk and resilience of a property and/or a region.

Simply put, his REC assesses risk factors based on the frequency of weather events multiplied by the intensity of damage. It also accounts for secondary and tertiary sources such as properties adjacent to oceans and rivers. Risk mitigation elements are also part of the equation. “A lot of this is based on data that will be widely available in a few years,” he says.

The REC “is about putting a lot of data in one place where we can get a risk index that is real. Whether it is a buyer’s interest or a real estate value asset, I think a tool like this is going to be very effective at eliminating risk for the industry and make it easier for homebuyers to make better choices,” Chopik says.

Weather risk data is not new. A case in point is an online map of sea-level rise put out by the National Oceanic and Atmospheric Administration in the U.S. It can predict the likelihood that a specific property in a seacoast town or city will be under water in the next 20 years, Chopik says.

He adds that North Carolina provides a flood risk website for any zip code in the state. “In that marketplace we can say, ‘caveat emptor,’ but in places like Ontario… we have to dig for it (information) so right now it is harder to empower the buyer to protect themselves.”

He says moving the REC from concept to reality will require a number of stakeholders – possibly a collaborative effort between insurers, governments, lenders and the real estate industry. The starting point is getting everyone to agree that climate change is real and it will impact homes and properties, he says. “We cannot be a climate-denying industry and also protect homeowners.

“It could cost you hundreds of thousands of dollars (in property losses). Until we get to the state where everyone is prepared to be there (on the same page) it is very understandable that homeowners and Realtors are confused.”

While property loss resulting from wildfires, wind, drought and heat might result from climate change, the biggest factor today is flooding. In the U.S. 20 million residents will be “domestic migrants” as a result of storm surge and other ocean-based damage, he says.

So, what is being done about flooding in Canada? As a result of the 2013 flood in Calgary, that city has integrated flood mapping with the MLS. Calgary also offers flood protection measures for homeowners living in high-risk zones. The list includes “simple things” such as raising mechanical systems off basement floors and building up curbs around property.

“These are the types of things that can take a building from uninsurable to insurable or unsellable to sellable,” says Chopik.

He cites the city of Edmonton’s mapping of infrastructure showing at-risk points to flooding from storms as a valuable resource to Realtors and clients.  Toronto, meanwhile, has charted 42 flood-risk neighbourhoods but many Realtors and their clients are not aware that they exist. “If a municipality or a regional government like a province is not releasing flood map data, then obviously we can’t ask the buyer to beware.”

Chopik’s advice to Realtors is to closely examine where the potential for risk is from climate change. Realtors in B.C.’s interior, for example, might research the effects of drought on well water and agricultural production. At the same time, they should talk to authorities on forest management about forest fire risks and property mitigation measures.

A realist, Chopik says even a knowledgeable salesperson or buyer won’t be able to forecast what might happen to a property because of climate change. As a case in point, he says Goderich, Ont., was not known as “the tornado capital of Ontario” until a category F3 tornado hit the city in 2011, ripping through the historic downtown and residential neighbourhoods.

“The reality of the future is you might be living in a rain forest that could be a desert or you might never have a flood before but now you have a deluge.”

He says while a home might be fully insured for flood damage, the property it is on might not be insured for “stigmatized value loss. It’s not something we normally think about, nor is it something we can easily assess.”

Describing climate change as a capitalist problem, he says there are sound financial reasons for governments to take the problem seriously:  gross domestic product (GDP) goes up when money is spent responding to climate change.

The industry needs to look at climate risks and, “probably by means of disclosure, find ways to create stability in the marketplace in the face of those risks.” The integration of flooding mapping with realtor.ca is an example, he says.

“Our industry is going to be impacted by climate change whether we like it or not. The question is: ‘Do we respond with maximum capability and impact (to help reduce property risk) or do we respond in a disaster recovery kind of mode?’”

13 COMMENTS

  1. Google “David Phillips on Climate Change”. Watch the video and heed his words.

    David is Environment Canada’s Senior Climatologist.

    Is the planet warming? Yup.

    Are we humans going to mitigate that? Nope.

    CO 2 has a residence time of 100 years plus. If we plug every smokestack and get rid of every fossil-fuel burning engine (cars, trucks, airplanes, ships etc.) WORLDWIDE…today…nothing will change. it will take over 100 years for the CO 2 in the atmosphere that we put up there today to dissipate. By the way, we need this terrible component called CO 2 to survive. The earth evolved from an over-heated bald-faced rock to its current state of wonderful life-sustaining utopia via huge inputs of CO 2 into the atmosphere over the eons.

    David’s sage advice is: We humans are very good at adaptation. We will adapt…as we always have adapted (as a species overall) to changing conditions. Life will go on. The planet will not explode and blow us all out into space. Some areas will benefit from climate change, and some will not. This has been the unfolding history of the earth, life thereon and humanity from time immemorial.

    To wit: Greenland was once a land of flora and fauna. It was very warm and humid there. Dinosaurs roamed its lands. Then the climate changed…again…and it is now covered by kilometer-thick ice. Global warming occurred, and there were no humans about the globe who could have caused, or even slightly contributed to, the warming effect. Yet here we are now by the billions living on the earth’s surface.

    We will continue to do what we have always done; we will adapt to changing conditions, because the earth will never stop changing, stop in its tracks and remain constant in its ideal (for humans) temperature range, rainfall range, wind speed range etc. There quite simply is no one-size-fits-all-forever climate range for earth and its inhabitants. There just is what is, as there has always been.

    Don’t like the climate where you currently live? Move, just as countless others before you moved. You’ve got two legs…use ’em. Animals have routinely used their legs to move from one area to another—and they still do so—as food and water diminish on a cyclical basis. It’s called migration. They instinctively adapt to changing conditions. So will we.

    In the meantime, don’t buy on a flood plain, at the bottom of a steep, high hill, on top of a mountain, in the middle of tornado alley, in the middle of a desert, next to a freeway, or next to a dump. The rest is a crap shoot. It always has been.

    Life’s kind’a like that.

    • Further to my post above: If climate change contributes to a lessening of human population worldwide, then there will be fewer of us to contribute to climate change. In the meantime, we humans are as equal a part of earth as the dirt that we stand on and build upon We are a product of the earth. We are not aliens. We are not enemies of earth as some would have us believe. Everything takes advantage of what the earth provides until equilibrium is reached, whereupon the balance tips and whatever was on the rise stabilizes. To that end the earth will be here long after we have disappeared from its face; it has no preferences. But who the hell will care? Not earth.

      In the meantime, do your bit. Don’t litter. Don’t pollute knowingly. Don’t be a slob. Most important: Don’t be intimidated by left-wing socialist know-it-alls who want to control every tid-bit of your lives. Become aware of your own infinitesimal cost to the planet and act accordingly, all the while knowing that the vast majority of air pollution and ocean pollution emanates from China and the Philippines respectively.

      Who contributed to the melting of the mile-thick ice sheet that covered half of North America thousands of years ago? Not us. I bet it was due to climate change dude. The earth slowly tilted on its axis again, as it does over and over again and again, the sun hit this part of the world head-on again, and voila, the ice melted.

      My advice? Buy stocks in a hip-wader production company, cash in, buy a big boat, and sell lifetime sailing tickets. Oh yeah…maybe change your name to Noah and take advantage of the myth.

  2. The planet has been around for billions of years and gone through many changes and upheavals during its existence. To suggest that 200 years of human activity is going to destroy it and everyone livening on it is just fearmongering and arrogance. There is more pollution coming out of the mouths of these parasites than anything else. I am no longer a realtor and happy not to share the space with these fools.

  3. Like Paul Harvey used to say…. “and now, the rest of the story” Read this article to find out how this “research” stands up against This research by UN IPCC Scientist …www.thenewamerican.com/tech/environment/item/31472-un-ipcc-scientist-blows-whistle-on-un-climate-lies
    I am really tired of being lied to by these guys!

  4. The above comments are appropriate. A geologist will tell you that from the layers and layers of rocks and the cooling down of the magma, lava etc., and many other geological ‘thermometers’ our tiny planet has gone through numerous climate changes. In fact the entropy of the universe may be even dropping. The tiny fireball of ours of some 3 to 5 billion years’ age is cooling off , releasing immense heat energy to the infinite cold space around, contracting, cracking mantle at plates, pushing and shoving continents, Himalayas growing, Venice’s sinking – you get the picture. Trillions of cubic meters of compact snow melting at the poles may actually bring down the sea level substantially, baring more coast-line. Very recently, I was on a beautiful sandy beach in the south seas. I could take a picture (in my cell phone) of the high-water mark, then take a picture of the low-water mark, and sell it to the suspense mongerers of either sides. In short, our place is not pressing the panic button – but DUE DILIGENCE – .that’s it. We are not Nostradamus, nor are we forecasters of apocalypse. Let Al Gores find their own niche. Thank you,

  5. And on the other hand the climate has been changing ever since time began. Yes advise your clients of flood plains, sloughing hillsides etc but this is another example of someone trying to cash in on nothing more than fear mongering ie David Suzuki, Al Gore and a bunch of no nothing actors. First we had the ozone going away and we were all going to burn up 10 years ago, next it was global warming – another falsehood, then CO2 which we need to survive, so now the new lie is the insistent climate change which no one can argue with and why, because it always has been changing just plain fear mongering for profit. Time to put the breaks on this.

    • Exactly Andy! I didn’t go there as most people out there choose to follow the fashionable trends of the time and avoid common sense. People like to follow the hard!

    • Charles

      I am just curious… I see on your site that you call yourself and your team “real estate advisors.” It is safe to presume that is a permitted designated operating (provincial approved) title in BC?

      In Ontario it is forbidden for a sales rep or broker to use such. Here, agents are “registrants” but curiously very few use the title. And in Ontario is forbidden to call oneself a “specialist.”

      As Kleenex and Xerox will never go away as a point of reference to tissues and photocopies, the agents here still refer to themselves as agents, not registrants. Over the years I have countless times who made that decision, and never got an answer. Years have passed: agents became registrants and licences became registrations.

      I have yet to see an Ontario business card that says, (sample) Joe Smith – Ontario real estate registrant (agent). (Licence) registration number: xyz1234.

      Also this sort of identity does not appear in any relative real estate correspondences attached to any signature. Yet I notice that in the mortgage field, such information appears in all forms of communications. Each mortgage rep provides their “licence” number. It is mandatory.

      Having been “licenced” (today called “registered”) back in 1980, seems hundreds of years ago, I always found it curious that CREA is a federal “Canadian” governing body apparatus yet real estate is a provincial matter not just as per licensing (registering), not “counciled” uniformly throughout Canada, in any way, shape, or form. Whether in regard to form or substance. One could quantify and qualify as “real estate is local.”

      As I did boatloads of relocation on an annual basis, the topic of (non) uniformity often was highlighted by astute consumers moving from one place to another.

      In a REM story today noting how many international reps a system has and how many relo referrals were had, I couldn’t help but do the math. As a sole operator, no team, annually I did plus or minus 35 referrals annually. “I” generated that business. That’s nearly one a week. Buyers and or sellers. I always felt so honoured to have been chosen.

      Just like the old ham bone roasting pot story that has circulated for years, (it’s always been done that way because gramma did it that way, prevails).

      Often on REM, comments state that drastic change is coming. I’ve heard that repeated for four decades, as have others long before me. The industry is in permanent motion, as are most industries. So no one should be surprised.

      The REM comment about buyer brokerage to be gone in 5-10 years is almost comical. As noted often in REM comments, here in Ontario, buyer brokerage came into being in the mid-90’s, under the guise of “buyer-representation.” And is still not taken seriously by many. I, for one, didn’t like the sounds of it, having teethed on sub-agency which worked perfectly fine. But once I discovered it wasn’t just a ship passing through in the night, I went seriously into trying to understand it, and seriously supported it only to find myself one of very few who took it seriously.

      Branch/franchise systems took years to try to even find a way to accommodate the buyer commissions breakdown billing apparatus associated with buyer brokerage operational admin functions.

      Nelson is right again. Individuals can do their own thing.

      In 1991 with ten years behind me, functioning as only a sales rep for a prestigious brand, I opened my own boutique brokerage, practically unheard of here at the time, although very obviously a successful American method.

      Now, here, there are subset offices/brokerages tied to franchise brands all over the place, with the “agent/registrant” names being dominant on building signage, as though “they” are the company. Good people doing good business. But surely confusing to consumers at large. But it has been discovered once again that the public doesn’t care who a rep works for. It’s a business where one on one interaction dominates. And, absolutely “local knowledge” is the master key to success.

      Respectfully,

      Carolyne L 🍁

  6. the Risks of weather, rainfall/snowfall, flooding (seasonal and otherwise) are part of Location. That’s why the (new) 3 Most Important Things List has as #1 – Location, Demographics and Time.

    • Right on – Locational risk – geography X meterology X Frequency X severity / ( Site and municipal resilience). Loss of use = time.

  7. Waterfront/lakefront properties may be worthless in 50 yrs or they may not be. When my clients buy a new home backing onto farmland we always discuss the possibility that at sometime in the future, it too will be developed. Common sense dictates you discuss the “what ifs” in any situation.

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