A recent Forbes survey found that nearly one-third of Americans cited climate change as a reason for moving in the past year.
For aspiring homeowners, climate has moved from a selling point to a significant risk factor. Potential homebuyers should educate themselves about the specific impacts of climate change to protect their real estate investments from potentially catastrophic events.
When deciding on the size of a property, environmental considerations were a matter of preference. Will buyers prefer the warm, sunny summers of the coast or the pleasantly cool, white winters of the northern interior? Today’s prospective homeowners are wondering how climate change will affect their property in the long term. You need to consider whether it will have a significant impact and what costs will be incurred as a result.
“As awareness of risk increases, the economic value of dangerous places decreases,” says climate futurist Alex Steffen. Rising costs due to climate change will make some properties indefensible.
“[They] It will be unofficially abandoned. That will cause more problems. “Bonds, loans, mortgages, business investments, insurance, skilled labor for large projects will all become increasingly scarce and their values will plummet,” Steffen predicts.
Stefan coined the term “fragile bubble” and wants to raise awareness. These vulnerable properties are prone to sudden and irreversible failure due to climate change, potentially resulting in irreparable loss to their owners. The climate crisis presents dire choices, especially for first-time homebuyers.
But being forewarned means being forearmed. The sooner investors and homebuyers alike understand the basic facts of climate risk, the more effectively they can mitigate real estate portfolios against extreme weather hazards.
There are few good options
As a global phenomenon, climate change affects humans everywhere. No region of America is completely immune from radioactive fallout. We all depend on the supply of goods and services across the country, so when a disaster occurs in one part of the country, everyone suffers.
However, some regions are being hit faster and harder than others. This information helps those purchasing land as an investment navigate the ever-changing climate map.
Texas, Florida, New Jersey and California, the nation’s four largest and most populous states, are all likely to face additional climate risks sooner, according to data from First Street and Moody’s Analytics. .
With its extensive coastline and wetland ecosystem, Florida is most vulnerable to rising ocean temperatures and intensifying tropical storms. The province has become a favorite destination for “snowbirds” from the north, especially among Canadian home buyers. Florida accounts for nearly half of all Canadian real estate purchased in the United States.
Climate change will continue to impact communities up and down the East Coast, and at some point will impact livability in states such as Florida and the Carolinas, according to Moody’s 30-year projections. In Arizona and other parts of the Southwest, record heat and fires are increasing weather hazards and threatening reliable water supplies.
In recent years, inland areas of the country are also feeling climate stress, with intense heat and unprecedented rainfall recorded. As weather becomes more extreme, smaller, less exposed cities like Boise, Idaho, are poised to receive an influx of newcomers seeking shelter from climate change.
flood and fire
Wildfires and floods are among the most damaging natural disasters that affect home valuations in the United States.
As research on climate change risks advances, the potential impact on the U.S. real estate market is becoming clearer. For example, the journal Nature Climate Change recently published a study showing that real estate values in flood zones are overvalued by $121 billion to $237 billion.
“Increasing flood risk under climate change is creating a bubble that threatens the stability of the U.S. housing market,” said lead author Dr. Jesse Gourevitch, an Environmental Defense Fund postdoctoral fellow. “These risks are rarely taken into account in real estate transactions, encouraging the development of flood-prone areas. Accurately estimating the cost of flooding on home values can assist in adapting to flood risk. You can, but many people could end up in a much worse situation.”
Unaccounted for environmental risks bode poorly for low-income households. The study found that this demographic could lose up to 10% of their property’s market value due to the risk of major flooding.
“For many people, their most valuable asset is their home. We need a policy approach that increases transparency of climate risks in markets while increasing support and protection for frontline communities,” said co-author Environmental Defence. said Dr. Carolyn Kowsky, the foundation’s vice president of economic policy.
insure yourself
Rising risks will make homeownership, already out of reach for most Americans, even more unaffordable. The increased cost of covering losses from natural disasters is unsustainable for homeowners and insurance companies.
Huge insurance claims from natural disasters in states like California and Florida are causing companies to rethink their risks and stop insuring sensitive areas. State-backed insurance companies are covering some of the gaps in this situation, but premiums may only cover the amount of claims that homeowners have to pay. This situation is getting worse as climate change continues to upend weather patterns and wreak havoc with extreme weather events.
Slowing the effects of climate change is a global effort that requires deeper collaboration between governments, businesses, citizens and the world. Unfortunately, there is little the average American can do to change broader trends.
But by being informed about the dangers posed by climate change, homeowners can prepare for the worst and protect their families’ futures. Real estate remains the primary investment vehicle for many Americans, making contingency planning an urgent need. Without it, local extreme weather disasters can cause untold financial devastation.