Flood risk as an example of changing climate impact on homeowners

I originally wrote this article at the end of 2017 in response to the editor of REMOnline.com, the Canadian Real Estate Magazine that goes out industry wide. In addition to this article I have written may others on related topics over the years including Flood and Property Valuation. 

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The new high-water mark on insurance payouts is flood. For a century fire was the big risk to lenders and homeowners. Today’s changing weather patterns have resulted in a dramatic shift in property risk. Over land and sewer backup are the predominant flood risks for Canadian homeowners today.

Blair Feltmate of the Intact Centre for Climate Adaptation says, “There is a rise in uninsurability resulting from the magnitude and frequency of storm events.” Floods can cause displacement of the owners, devaluation of the home and an increase in toxic mortgages for lenders. This is not only expensive for individuals, it’s also costly for the insurance industry, lenders and municipalities.

Real estate sales reps who list properties with a history of flooding are advised to disclose. Toronto real estate lawyer Tannis A. Waugh says, “Disclosure offers best avoidance of future litigation.” Recently the City of Edmonton released flood maps for 100 neighbourhoods, disclosing risk hot-spots. Flood mapping may be available within your market area. Request this information from your municipality to ensure you are in the know.

Sales reps can also suggest solutions for homeowners to reduce flood risk, including the installation of back flow prevention valves and effective grading. The Home Flood Protection Program (currently only in Ontario but planning a national rollout) offers numerous resources for reducing risk to existing houses. These improvements can be used in a listing package to provide buyers with greater confidence. Another listing approach is to acquire a property-specific insurance quotation to be included in the marketing package.

Sales reps representing buyers can work to protect their clients. Look for obvious flood risk such as proximity to waterways and property grading. However, many properties with flood risks offer no visible markers. In these cases, it is important for salespeople to investigate the information available from municipalities and insurers relating to flood risk. Including an inspection and insurability for flood offers a prophylactic measure to reduce risk for buyers.

Alan Carson of Carson Dunlop Home Inspection Services says his firm’s inspections focus on water, including the risk of flood. “We pay close attention to topography and drainage around the home. We also look for evidence of past moisture problems inside and outside the home.”

That said, Glen McGillivray of the Institute for Catastrophic Loss Reduction says, “Topography does not reveal neighbourhood flood risk. There are many factors that create risk to property, not all risk is available from visible indicators.”

Toronto Mayor John Tory offered this: “The City of Toronto is working hard to reduce the risk of basement flooding. Last year, the city spent $82 million on stormwater management – around half of that for the city’s basement flooding protection program. Over the last three years, my administration has been focused on investing in the city’s water, wastewater and stormwater infrastructure.”

In 2009 the City of Toronto released Ahead of the Storm, a document outlining risk and adaptation strategies. At that time, the president of the Insurance Bureau of Canada, Mark Yakabuski, said to Toronto City Council, “The one in 40-year storm has become the one in six- year storm and it is making it difficult for insurers to assess risk.” This foreshadows intensifying storm impacts that are affecting homeowners across the country today.

Calgary Mayor Naheed Nenshi offered this perspective: “As our climate changes and flooding in Calgary becomes more common, protecting our citizens and their homes remains a top priority for The City of Calgary. Since the 2013 flood, we have spent over $150 million on flood mitigation and resilience projects throughout Calgary and we are working closely with the provincial government to build upstream mitigation projects. Of course, preparing for the next flood is a joint responsibility that also includes home and building owners and my colleagues at The City of Calgary continue to offer resources to help citizens become more resilient in the face of future flooding.”

The Calgary Real Estate Board has been active at engaging members in a progressive dialogue around flooding. For Earth Week it promoted the NAR Green Destination and engaged members in active conversation about helping Calgary homeowners with green initiatives including flood adaptation and mitigation.

CREA says that flood risk is regional, so it falls into the mandate of provincial associations. The Ontario Real Estate Association’s Matthew Thornton says, “OREA will work with the province of Ontario on initiatives related to climate change, flooding and housing as they emerge.”

Please contact your local board to get involved in the continuing dialog on this important emergent issue.