Lenders with the best climate data will be in position to discrimate

As banks and other institutions get more detailed models, people who are most affected by climate change will face difficulties in getting financing.

We now live in a world where climate gentrification exists: People and institutions are starting to assess and appraise properties based on their susceptibility to climate impacts. The idea was largely hypothetical as recently as 2016, but over the past two years a decent body of work has emerged, much of it from U.S. academics, showing that both mortgage lenders and property buyers are pricing in some forms of climate risk.

Knowledge about climate change impacts, whether accurate or not, is already driving decisions by financial institutions that in turn affect livelihoods. Research by Jesse Keenan, an associate professor at Tulane University, and Jacob Bradt, a Ph.D. candidate at Harvard, found that lenders in some coastal and flood-prone areas are already requiring higher deposits before providing mortgages. They are also more likely to move such mortgages off their books via securitization, including to the government-sponsored entities Fannie Mae and Freddie Mac.

read more at: https://www.bloomberg.com/news/articles/2020-06-26/lenders-with-the-best-climate-data-will-be-in-a-position-to-discriminate

What happens to home prices if flood maps start measuring climate change? Million of Americans are about to find out

Millions of Americans just woke up in a flood zone that had never before been listed on U.S. government maps.

The first-ever public evaluation of flood risk for every property in the 48 contiguous states has found that federal maps underestimate the number of homes and businesses in significant danger by 67%. The new flood-risk data, released Monday by the research and technology nonprofit First Street Foundation, is a virtually unprecedented disclosure of how much damage climate change can be expected to inflict at the level of individual homes.

Under the new model, an additional 6 million properties are in jeopardy of flooding compared to government estimates, bringing the total to at least 14.6 million.

The vast majority of counties saw an increase on a percentage-point basis. One in 10 American properties are at significant risk of flooding right now.

There are 142 million properties in First Street’s public database, and each one is scored on a 10-point scale based on the likelihood of flooding over a typical 30-year mortgage. The score, called Flood Factor, rates the likelihood of flooding in simple terms. (A Realtor.com spokeswoman said the new flood-risk scores, which had been slated to be introduced on the website Monday, would be added to listings after a technical issue is resolved.)

read more at:  https://www.bloomberg.com/graphics/2020-flood-risk-zone-us-map/

Covid19 – Is commercial real estate headed for a crash?

Within the next week, David Marino will list nearly 300,000 square feet of sublease office space in Sorrento Mesa that current tenants no longer need.

For Marino, a principal at the Hughes Marino commercial real estate brokerage firm that specializes in representing tenants, these subleases are an early wave of what he expects to be a tsunami of unwanted office space flooding the market in coming months in the wake of COVID-19 shutdowns.

Social distancing, plunging revenue and layoffs already have wreaked havoc on certain commercial real estate sectors, such as hotels, malls, movie theaters and non-essential retail.

Office space could be next.

“Most companies have now realized that they can work as effectively remotely, and some employees actually like it,” said Marino. “Office tenants contemplating their future requirements are going to be leasing less space than they have now.”

That could create ballooning supply starting this summer — a surplus that might make the Tech Wreck of 2000 and the Great Recession of 2008-09 “look like a rounding error,” said Marino.

read more at: https://www.sandiegouniontribune.com/business/story/2020-06-20/coronavirus-fallout-is-commercial-real-estate-headed-for-a-crash