Climate Scores for US Homes Are the New Big Number

Listings websites such as Zillow have tools that let buyers learn about their dream home’s risk of flood, fire, and wind damage.

Forget about square feet and the number of bathrooms. Home buyers now will also be asking about the weather. Many people move to areas endangered by extreme weather events because the lifestyle and cost of living outweigh the risks. But that is changing, with soaring insurance costs, two recent devastating hurricanes, and now the ferocious wildfires in Los Angeles underscoring the issue.

Home listings giant Zillow Group is rolling out climate-risk estimates that size up a home’s likelihood of damage from flood, fire, and wind over the next 30 years. These scores, along with soaring insurance costs, could change the economics of where people choose to live, as buyers avoid homes with high risk or face fewer bidding wars to buy them.

Hurricanes Helene and Milton, which separately hit the Southeast last autumn, caused up to $81.5 billion in combined insured and uninsured losses, according to estimates by Core- Logic, a property data and analytics provider. “We’ve seen this massive move of people since the pandemic from the Northeast and Midwest into Florida,” says Moody’s Analytics chief economist Mark Zandi. “That now is in jeopardy because of the threat of storms like this and what it means for the cost of owning a home.”

A house’s risk of flood or wildfire usually isn’t as apparent at first glance as an ugly bathroom or cramped kitchen. But now, Zillow is joining home listing websites like Redfin, Realtor.com, and CoStar Group’s Homes.com by adding scores provided by climate-risk modeling company First Street. (News Corp, which owns Barron’s, also owns Realtor.com operator Move.)

Zillow may not be the first to add First Street’s scores but it’s the largest, with 233 million average monthly unique users. That means its rating system will be seen by many more people. Zillow users can find a listing’s score about halfway down the page on its website, underneath its payment calculator section. Not every home has a score.

First Street builds models based on historical data, climate projections, and statistical analysis to determine the probability that a property could see flooding, wildfire, dangerous winds, or other detrimental weather related events, even if it hasn’t in the past. On listings websites that use the data, this appears as a score from one to 10 across five risk categories.

“For people who exclusively use Zillow, this will be the first time they really have seen this information, whether it’s on their property or in the search process,” says Jeremy Porter, head of climate implications at First Street.

Homes with better climate scores could become more sought after while those with worse readings could see lower prices, according to a National Bureau of Economic Research working paper co-written by Redfin’s chief economist, Daryl Fairweather, and researchers from the University of Southern California, Columbia University, and the Massachusetts Institute of Technology.

To test the impact of risk scores, Redfin displayed First Street’s flood ratings to some users but not to others. The information changed some users’ behavior on searching and buying, Fairweather says. Compared with a control group, users who viewed homes with high risk scores instead made offers on properties that were about half as risky.

The scores also drove up competition for less-risky homes, increasing prices slightly, and reduced demand for some high-risk homes. “The flood risk information had a tangible effect on property prices, with homes in high flood risk areas experiencing a decrease in value,” the authors wrote.

The tool isn’t the only way that prospective buyers can learn about their dream home’s weather risks. The Federal Emergency Management Agency also maps potential hazards through its National Risk Index and maintains maps that designate which homes require flood insurance.

A buyer should consider First Street’s scores as a starting point for further research, says Collyn Wainwright, the president of the Greater Nashville Realtors board of directors. “I would encourage consumers to use it as a guideline to then ask more questions about a property,” she says. “Talking to your homeowners’ insurance agent or broker is going to give you a much clearer, [more] accurate picture of what the risk is for that particular home.”

Insurance is an issue that increasingly is tied to climate risk. In fact, rising premiums are the first way that many homeowners feel the impact of storm risks, says Ben Keys, a real estate professor at the University of Pennsylvania’s Wharton School.

“Getting any sort of credible information about a property’s climate risk is a big step in the right direction,” says Keys, who co-wrote a separate National Bureau of Economic Research working paper on climate risk and property insurance last year. Keys’ research found that premiums rose 33% from 2020 to 2023, with those climbing sharply in areas that FEMA deems to be at higher risk.

In the long run, climate risk could alter migration patterns. But consumers don’t need to dismiss an area solely based on an area’s risk rating. It’s cheaper to pay to make a home more resilient than to replace it after disaster strikes, notes John Rogers, chief data and analytics officer at CoreLogic, which sells an analytics tool that helps insurers size up the resilience of individual homes to storms.

A person’s home is “the biggest way that Americans make wealth,” he says. “It’s definitely worth protecting.”

Source: Barrons

Behind Millennials’ Real Estate Worries

This generation sees owning a home as a speculative asset with wild price swings. They have a point: It’s not their parents’ housing market.

The millennial generation hasn’t had it easy in the housing market. Born from 1981 to 1996, millennials came of age during two momentous events: a housing bubble that began to burst in 2006, and the Covid-19 pandemic starting in 2020.

While the financial crisis and ensuing recession demonstrated some perils of homeownership—rapidly falling prices and difficulties selling quickly—the pandemic, with its soaring home prices, reinforced just how volatile prices could be while making ownership unaffordable for many. Millennials emerged from those dual crises with a new attitude toward homeownership. 

Where their parents saw a first home as a low-risk investment that would gradually appreciate in value, this younger cohort sees  something far more dangerous: a speculative asset with wild price swings that can make owners rich—or bankrupt them if they get the timing wrong.

As a result, many are less apt to buy than their parents were at similar ages. Today’ 30-year-olds, for instance, have a ownership rate of 43%, while baby boomers at that age were at 52%, according to a Redfin analysis of government data.

The median age of a first time buyer increased to 38 this year, its highest on record, according to the National Association of Realtors. When they do wade into the real estate market, millennials are unusually picky about prices. They are “obsessed with timing the market,” says Jack Elliot Heard, a New York City– based Compass agent.

“People always want to try and catch the bottom or sell at the top.” Of course, finding a true bargain has rarely been more difficult. Builders pulled back for years after the financial crisis, creating the expensive and constrained market that millennials are entering today. A generation can experience the same macroeconomic events, but their reactions—and decisions—can vary greatly, says Ashley Agnew, a certified financial therapist and senior wealth advisor at the Massachusetts-based Centerpoint Advisors.

“The events that we live through shape everything about our finances,” she says. That could help explain why some millennials pounced at homeownership at the start of the pandemic and others didn’t. The decision helped cement this generation’s economic divide: Owners benefited from enormous home-equity gains while others shouldered rising rents. “Millennials who weren’t able to access homeownership are now facing one of the most challenging markets out there,” says Lisa Sturtevant, the chief economist at Bright MLS, a home-listing information service. They didn’t have to lose a home from the crisis to consider buying property a gamble.

They grew up in a time when homeownership was depicted in popular culture as a smart bet or a painful mistake—often as two sides of the same coin. Mounting foreclosures that resulted from the 2008-09 recession were depicted in movies like The Big Short.

On television, PropertyWars and Flip or Flop followed investors buying distressed homes at auction to renovate them in hopes of a profit. Some millennials, like Colorado based Craig Curelop, 32, have gone all-in on ownership as an investment. In 2017, at age 24, he started buying homes and renting out individual bedrooms.

Now, he and his wife live in a single-family home without renters, but Curelop continues to rent his other homes. “The sacrifices Imade earlier allowed us to have a little bit more luxury and freedom now,” he says. Curelop says he never saw himself as a real estate investor until he discovered online real estate investing community Bigger Pockets.

Other websites take water cooler conversations about the housing market global: Zillow Gone Wild highlights the most outlandish homes for sale. Various Reddit accounts and YouTube videos run the gamut from predictions on a looming housing crash to tips on whether to buy or rent.

Millennials grew up with more instant information than previous generations. Online searches quickly produce property records and estimated home values, making it easier to gauge local trends, hunt for deals, and calculate the value of a home in the same way someone could check stock prices online. Pia Levine, 33, bought her first home during the pandemic. She has no plans to move, but the Long Island, N.Y., resident says she’s “still seeing what’s available” by flipping through listings on Zillow.

She said her husband calls the website “Tinder for houses,” referring to the dating app where users continually swipe through profiles of potential suitors. Some in the hesitant camp, perhaps with long memories of the housing market bust, see homeownership as an undue risk. “Living through this experience, people effectively become more risk averse,” says Tomasz Piskorski, a Columbia Business School real estate professor.

Younger generations are less optimistic than older ones about the growth in home prices over the next year, according to Fannie Mae’s November survey. Others see it as a burden. Re/Max agent Todd Luong, who has worked in the Dallas area for nearly two decades, has noticed a hesitancy among some young buyers. “I’ve had some people come to me and [say], ‘I heard buying a home is a liability,’ ” he says. “That was kind of shocking to me.”

In fact, nearly half of all millennial and Gen Z respondents to a recent Santander survey said owning a home is more trouble than it’s worth, a significantly higher share than the 27%of Gen X and boomers who said the same. Internet searches for “housing crash” rose to its highest level in years in the spring of 2020, according to Google Trends. Some buyers braced for the worst while others jumped in. The bulls who bought largely have won out over the hesitant.

“They’re doing great,” says Bright MLS’ Sturtevant. They’re building equity, accumulating wealth, and preparing to trade up. In a survey, the listing service found that homeowners in their 30s and 40s are more likely to sell and trade up than boomers in the coming year. Those who bought during the pandemic managed to insulate themselves from rental inflation, one of the most stubborn drivers of overall inflation.

The cost of renting a primary residence rose 4.4% in the 12 months ended in November, nearly double the overall rate of inflation in the same period. Since January 2020, rental costs have risen 26%. That has given rise to a better sense of financial security for young homeowners. The share of Gen Z and millennial homeowners who told Redfin in September they were better off than they were four years prior was 17 percentage points higher than for renters, a significantly wider gap than Gen X and boomer respondents.

“With millennials, there is really a divide between those who bought houses and those who did not,” says Jason Dorsey, president and lead researcher at generational research firm The Center for Generational Kinetics. Homeowners in 2022 had nearly 40 times the net worth as renters, according to the Federal Reserve’s most recent survey of consumer finances.

That gap has implications for millennials’ economic well-being and societal divide as they age. Increased inequality can spur political polarization and impede economic growth, according to the International Monetary Fund. These conditions threaten the perception of homeownership as a path to wealth.

Some millennials who can’t buy will fall behind in wealth creation, while others will seek alternative investments. An annual National Association of Realtors survey showed that the smallest share of recent buyers see a home as a better investment than stocks than any since 2006.

Buying a home in today’s expensive market isn’t an easy solution to bridge the divide, and that will keep some millennials waiting in the wings. “There are a lot of people on the sidelines,” says Compass’ Heard. But perceptions could change if the housing market loosens up. If mortgage rates drop quicker than expected, those millennial market timers could jump in, spurring competition and raising home prices. “When they decide to enter back in the market, it’s definitely going to shake things up,” Heard says.

Source: Barrons

Pricing Greenland: The Essence of the Deal

Executive Summary

• President-elect Trump has floated the idea of either purchasing Greenland from Denmark or allowing the territory to join the United States of its own accord.

• The idea is not novel: The United States has a history of major land purchases and has considered purchasing Greenland before – for $5.5 million in 1868 and for $100 million in 1946 – but what would the price be this time?

• This paper identifies the ballpark purchase price in two ways: using the market price of its mineral reserves suggests a price near $200 billion, while using Iceland as a proxy for the value of its North Atlantic location suggests a price just shy of $2.8 trillion.

Introduction

In late 2024, President-elect Donald Trump suggested that the United States buy Greenland from Denmark. This has implications for U.S. national security: Greenland is home to the U.S. military’s Pituffik Space Base and growing North Atlantic shipping lanes have drawn interest from Russia and China. Moreover, Greenland hosts vast mineral resources including natural gas, oil, rare earths, and copper. Currently, much of the global supply of these minerals comes from China.

This is not the first time the United States has considered buying the autonomous Danish territory. In 1868, Secretary of State William H. Seward pushed to acquire both Greenland and Iceland for $5.5 million, yet no formal offer ever materialized. In 1946, President Harry Truman offered Denmark $100 million for the island. Today, that offer is equivalent to about $1.6 billion when adjusting for inflation. When accounting for U.S. gross domestic product (GDP) growth and the offer value as a percentage of GDP at the time, this comes out to $12.9 billion in today’s dollars.

President-elect Trump has not attached a specific dollar amount to his suggestion to buy Greenland. Nevertheless, the interest in Greenland as a source of minerals and as a strategic trade and military location may offer a strategy for identifying a ballpark price. On the one hand, one could estimate the value of known mineral resources and the value of what could be extracted. This is essentially valuing Greenland for “what you get.”

Alternatively, one could estimate the price from Greenland’s North Atlantic location – an estimate based on “where you get it.” From the “what you get” perspective, the value of Greenland’s known mineral resources is $4.4 trillion, but only a small fraction can currently be extracted economically. An estimate based on that fraction is $186 billion. Using the “where you get it” approach, considering its strategic geographic location, balloons the price to $2.76 trillion.

To be clear, these estimates are not intended to answer the question of whether it is a good idea for the United States to attempt to buy Greenland, or for Denmark to sell Greenland; they are simply to inform any discussion.

Methods of Pricing

Sum of Its Parts: What You Get

One way to estimate the price of Greenland is to assess the market value of its most important mineral reserves to determine the potential long-term economic value of the island’s resources. Figure 1 displays the known critical minerals and energy resources of Greenland alongside recent average market prices to provide a total price estimate.

Figure 1: Known Mineral and Energy Resources in Greenland

Resource	Known Resources (Thous. of Metric Tons) *Unless otherwise noted	Price Per Metric Ton (Current $)	Total Value (Millions)
Antimony	3.8	$12,382	$47
Baryte	480	$150	$72
Beryllium	0.07	$1,400,000	$91
Chromium	560	$9,261	$5,186
Coal	183,000	$69	$19,627
Copper	108	$8,992	$971
Feldspar	80,800	$102	$8,242
Fluorite	250	$360	$90
Gallium	152	$255,730	$38,871
Graphite	6,000	$1,200	$7,200
Hafnium	108	$4,537,200	$487,749
Lithium	235	$113,585	$26,693
Molybdenum	324,000	$55,600	$18,014
Natural Gas	148,000 bill. cu ft	$0.00219/cu ft	$324,120
Niobium	5,900	$25,000	$147,500
Oil	17.5 billion barrels	$80.53/barrel	$1,409,275
PGM*	0.58	$30,583,398	$17,616
Phosphorus	11,500	$165	$1,898
REE*	36,100	$42,922	$1,549,484
Silicon metal	2,800	$2,207	$6,180
Strontium	9,800	$72	$702
Tantalum	916	$190,000	$174,040
Titanium	12,100	$2,475	$29,948
Tungsten	26	$260	$7
Vanadium	179	$14,612	$2,616
Zirconium	57,100	$3,014	$172,099
Total			$4,441,399
Excluding Oil and Gas			$2,708,004

Source: The Geological Survey of Denmark and Greenland, The U.S. Geological Survey

PGM= Platinum Group Metals (median price); REE= Rare Earth Elements (median price)

Given current market prices and estimated resources, Greenland’s critical mineral and energy assets would be worth approximately $4.4 trillion. Notably, Greenland ceased issuing licenses for oil and gas exploration due to both climate and cost concerns; removing oil and natural gas from the calculation would bring Greenland’s value to roughly $2.7 trillion. If Greenland were to join the United States, however, many or all these restrictions would likely be removed. It is also important to note that market prices for these resources fluctuate and introducing vast amounts of minerals to the global market would likely put downward pressure on prices.

It is more likely that a bid for Greenland would be based on a value for mineral reserves, which is a subset of known resources that are considered economically viable for extraction. As of 2019, 35,000 square kilometers (just 1.6 percent of the land area) in Greenland were under exploration for potential mining sites or mineral deposits. Expanding exploration would require a significant investment to build infrastructure sufficient to extract known resources.

Given Greenland’s harsh environmental conditions, limited workforce, and need for an infrastructure buildout to make extraction possible, the conversion rate from resource to reserve is likely low. A U.S. Geological Survey report showed that Greenland’s reserves of rare earths – which are strategically important as China dominates global supply – were 1.5 million tons, a resource-to-reserve conversion rate of 4.2 percent. Assuming this conversation rate was consistent across all mineral resources, the estimated value would be a much more modest $186 billion. This estimate should be considered a lower bound as it is likely some of the known resources are more economically viable to extract than others. This estimate also excludes the possibility that resources become more viable to extract over time as it is difficult to determine future technological advancements or higher resource prices.

Strategic Location: Where You Get It

Much of the national security interest focuses on shipping lanes linking Europe, North America, and Asia through Greenland that are made viable by the receding Arctic ice cap. These trade routes have also drawn interest from geopolitical rivals, with China seeing the region as vital to its “polar silk road” and Russia interested in securing its own access to Arctic minerals. The strategic importance is akin to the shipping lanes surrounding Iceland, which reduce shipping times by as much as 35 percent. Moreover, the United States has military interests in Greenland. Gaining control of the island would give the United States a greater footprint between Russia and the U.S. mainland.

What would it cost to purchase Greenland and achieve these strategic and military objectives? Iceland, because of its similar location, is also strategically important to the United States. Among other things, it puts a U.S. presence in the middle of the North Atlantic to deter Russian aggression. Thus, one can use the cost of buying Iceland to estimate the cost of buying Greenland. If the United States were to purchase all the commercial and residential real estate on Iceland it would come with a price tag of $131 billion, or $1.28 million per square kilometer. Extrapolating this estimate to the size of Greenland would result in an estimated value of $2.76 trillion. This provides a rough pricing estimate on the location of Greenland and lends some tangible value to the intangible and difficult to determine price of U.S. national security.

Past U.S. Land Purchases

The largest land purchase in U.S. history was the Louisiana Purchase in 1803, a $15 million deal with France that represented over 3 percent of U.S. GDP at the time. Today, the equivalent GDP would be over $890 billion. The most recent land purchase was the 1917 $25-million deal to acquire the Virgin Islands, which would amount to about $12.1 billion today accounting for U.S. growth. These past land purchases offer a comparative analysis to consider what the United States might be willing to offer for Greenland given historic examples.

Figure 2: Previous U.S. Land Purchases

	Year	Purchase Price (millions)	Price per km2	Percent of GDP at Time of Purchase
Louisiana Purchase	1803	$15	$7.01	3.04%
Florida Purchase	1819	$5	$26.78	0.68%
Gadsden Purchase	1854	$10	$130.21	0.26%
Alaska Purchase	1867	$7.2	$4.74	0.09%
U.S. Virgin Islands	1917	$25	$71,023	0.04%

Source: FRED, Measuring Worth Datasets, United States Territorial Acquisitions

In 1868, the United States considered purchasing both Greenland and Iceland from Denmark for $5.5 million which, as a proportion of GDP, is comparable to about $19.6 billion today. In 1946, the United States officially proposed to purchase Greenland for $100 million, roughly $12.9 billion relative to the U.S. economy in 2024.

Figure 3: Previous Offers to Purchase Greenland

Previous Proposal to Purchase Greenland	Year	Offer ($ millions)	Price Per km2	Percent of GDP at Time of Offer
Greenland and Iceland	1868	$5.5	$2.54	0.07%
Greenland	1946	$100	$46.17	0.04%

Source: Measuring Worth Datasets, Time, Nunatsiaq News

Offering between $12.9 billion and $19.6 billion for Greenland today would match these historical analogues as a percentage of U.S. GDP in 2024, accounting for decades of economic growth since the last offer. These bids would end up providing Denmark between three and five times the total GDP of the island. If the United States were to value Greenland at $186 billion based on estimated mineral reserves, this would equate to approximately 0.64 percent of 2024 GDP, similar to the Florida Purchase of 1819.

Other Estimates

In a recent article in The New York Times, David Barker, a real estate developer and former economist at the New York Federal Reserve, estimated Greenland’s value to be between $12.5 billion and $77 billion. Each of these estimates accounts for the economic growth of the United States since the purchase of Alaska and the economic growth of Denmark since the United States purchased the Virgin Islands.

Conclusion

President-elect Trump’s idea to acquire Greenland has precedent, as the United States has a history of land purchases and has offered to purchase Greenland before. But what would be the asking price? The national security rationale for Greenland stems from both its military value and proximity to increasingly important Arctic shipping lanes and its large critical mineral deposits. We estimate a ballpark price in two ways: using the market price of its mineral reserves suggests a price near $200 billion, while using the price of its North Atlantic location suggests a price just under $2.8 trillion.

To be clear, these estimates are not intended to answer the question of whether it is a good idea for the United States to attempt to buy Greenland, or for Denmark to sell it, but simply to inform any discussion.

Source: American Action Forum