Are you buying a flood-prone home? It's hard to find out
Insurance Bureau of Canada estimates 10% of homes in Canada are uninsurable for flooding
Anyone who owns a home knows its weaknesses when it rains.
But those shopping for a place to live largely don't have that information, and may unwittingly move into flood-prone areas.
"Consciously or unconsciously, [people] just see a house that otherwise looks nice when they're looking at it on a sunny afternoon and think, well, this looks like a pretty good deal and the price is a little bit lower and let's take advantage of that,'" said Blair Feltmate, head of the Intact Centre on Climate Adaptation at the University of Waterloo in Ontario.
"But they're being very naive in doing so."
Feltmate says that in the past decade, homes in areas of Canada that experienced catastrophic flooding sold for an average of "minus 8.2 per cent" for at least six months after the flood. A home didn't even have to be flooded to see this price reduction — simply being in a flood-impacted neighbourhood was enough to lower the home's value.
Media outlets have noted that hundreds of thousands of Americans on the lookout for more affordable homes have inadvertently moved into flood-prone areas.
Flooding has led to more than $3 billion in insurable losses in Ontario and Quebec this year, according to the Insurance Bureau of Canada. The IBC estimates 10 per cent of homes in Canada are uninsurable for flooding, but information about the exact locations is not widely available.
"[Homebuyers are] saying, 'Look, I'm about to make the biggest investment decision in my life, and this is also going to be my retirement plan. Is there anything I need to be aware of in terms of extreme weather risk, and in particular flooding, that could affect this?'" Feltmate said.
Publicly available flood maps in Canada are 20 to 25 years out of date, he says. But in the last few years, real estate agents and insurance brokers have become "increasingly informed" on the subject of climate change and home flood protection and better at communicating that to prospective homebuyers.
Why you might end up with a flood-prone home
A spokesperson for the Appraisal Institute of Canada (AIC), the body that assigns values to houses in this country, said in an email to CBC that its members have "proactively included climate risk considerations in our educational curriculum, ensuring appraisers stay current on how these risks can affect property values."
But the organization acknowledged that "when it comes to flood risk data, access can be inconsistent across Canada."
- Have you unknowingly bought a new home in a flood-prone area? We want to hear about your experience in an email to ask@cbc.ca.
The collection and availability of flood risk data varies by region. AIC noted that Alberta publishes flood maps that are publicly accessible at no charge; in B.C. and Ontario, the province and municipalities help produce flood maps, but AIC said "there can be variations in the quality and availability of data between municipalities and regions."
That "lack of consistent, up-to-date data makes it challenging to fully assess the flood risks associated with a particular property, especially in rural or less-developed regions," said the AIC spokesperson.
A 2023 paper in the journal Nature Climate Change found that U.S. properties might be overvalued by as much as $237 billion US because appraisers don't take flood risk into account.
Craig Stewart, vice-president of climate change and federal issues at the Insurance Bureau of Canada, says insurers buy risk maps from third-party companies such as JBA Consulting and Impact Forecasting to inform their decisions about which properties to insure and at what cost.
He said insurers would generally be concerned about any home that would have a five per cent chance of flooding in any given year.
"That's what the insurance industry would seek to avoid. Those homes are no longer considered to be accidents when they flood. We know they're going to flood and so insurers generally stay away from them," he said.
Multiple data providers
Because multiple companies are collecting the information, however, Stewart says there can be differences in the data. The result is that while one insurer might balk at covering a specific residence, another insurer might go ahead with it, because the flood data they're using is more favourable.
For this reason, "we encourage homeowners that if they can't find insurance from one company to shop around," Stewart said.
The flood data insurers use isn't widely shared because it's proprietary. But Stewart says this type of information should be available on listing services.
One such service is Zillow. The site, which in 2023 listed about 160 million U.S. homes, will now show how vulnerable properties for sale might be to extreme climate events.
On Zillow's corporate site, Manny Garcia, a senior population scientist at Zillow, said that "while all generations juggle trade-offs like budget, floor plans and commute times, younger home shoppers are more likely to face another consideration: They want to know if their home will be safe from rising waters, extreme temperatures and wildfires."
The feature is not available yet for Canadian properties on Zillow.
Stewart says real estate companies in the U.S. must disclose the flooding risk at point of sale. That requirement doesn't exist in Canada, although Stewart said "we believe it's coming."
The federal government is in fact working on a centralized national portal where all flood maps across Canada will be compiled. It's being created with the global professional services company Aon and flood risk intelligence firm Fathom; Fathom also provides data to Zillow.
Stewart says the portal would allow homebuyers to type in a postal code and instantly see what the flood risk is in the area.
"Once that … authoritative source of flood information is available, Realtors could point to it, we could point to it, banks could point to it and we'd have a consistent view," Stewart said.
What you can do to protect your home
Feltmate says that if you do end up buying a home that's highly vulnerable to flooding, you can still take steps to protect yourself during a downpour.
He said that about 70 per cent of homes in Canada have grading somewhere around the property that directs water toward the foundation rather than away from it, so addressing that would be one constructive measure.
He also advised installing a battery for your home's sump pump as a backup in case of a storm-related power outage. And if you have a backwater valve, which is key in containing surges in the plumbing system, Feltmate recommended cleaning it regularly.
Stewart says measures like these could make a flood-prone home more attractive to an insurer, although there's no guarantee.
Stewart said one backstop for those who can't get insurance is disaster financial assistance from the federal government. But there are a few caveats with that.
"The problem with those funds is that they take a long time to arrive, they're unpredictable and … what is covered are only certain core elements in your home," Stewart said.
"So most homeowners are out of pocket for tens of thousands of dollars even if they get those taxpayer-funded bailouts."
Corrections
- A previous version of this story said the Canadian government is working with the firms Fathom and First Street on a national portal that would centralize Canadian flood maps. In fact, the government is working with Fathom and global professional services provider Aon.Nov 19, 2024 8:27 AM ET
