SIPA Professor Shows Flood Risk Information Reshapes Home Buying Decisions

A groundbreaking study coauthored by SIPA professor Robert Metcalfe reveals that providing home buyers with flood risk information significantly influences their purchasing decisions, reshaping how people navigate the housing market in an era of climate change.

The research, conducted through a large-scale natural field experiment with Redfin, randomly assigned 17.5 million users to receive information about flood risk on properties they searched. The findings demonstrate that climate risk data affects every stage of home buying, from initial searches to final purchases.

"We found that it significantly impacted the tours they took because they weren't looking at high flood risk homes anymore, and it affected where they ultimately made an offer," says Metcalfe. Buyers who saw flood risk information were much less likely to make an offer on a high-risk home than those who didn't.

The study revealed that people actively trade off property amenities to secure homes with lower flood risk. Interestingly, the impact proved consistent across political divides—buyers in both Republican and Democrat counties responded similarly to the risk information.

Most significantly, the research shows that providing this information changed property prices and altered the market's equilibrium, demonstrating that climate adaptation can be forward-thinking and proactive rather than merely reactive.

The findings come at a crucial moment. Zillow recently removed climate risk scores from its home listings, a decision that has drawn criticism from researchers and advocates concerned about transparency in real estate markets.

The research underscores how access to information can empower consumers to make more informed decisions about climate risks in real estate markets.