The Impact of Climate Change on Real Estate

The climate change crisis is real, and it will impact the prices and availability of real estate all over the United States. The crisis is coming, but action is slow.

Climate change is affecting many industries, including the real estate industry. Because climate conditions affect real estate, location matters; if you buy a home in a flood hurricane zone, natural disasters could destroy your investment. Do real estate prices change based on potential damage from natural disasters or climate change? Yes and no. 

Increasing Home Prices Despite Natural Disasters

Some of the most expensive real estate is along the coast, and prices do not seem to be lowering. Despite the risk of rising sea levels and extreme hurricanes caused by climate change, home prices along the Atlantic coast continue to rise. According to Zillow, home prices in hurricane zones have prices up to 58% higher than homes within 10 miles of the coast. 

According to climate change experts, about 10% to 12% of homes in Hawaii and Florida should be underwater by 2100 if sea levels rise by six feet. Experts predict that about 2% of homes in the US will be underwater within 80 years. At a minimum, climate change will force a minimum of four million Americans to move in the next 80 years. 

Short-term Memory with Climate Dangers

If the oceans and lakes swallow coastal homes, they become worthless. The possibility of homes sinking because of rising sea levels should force home buyers to reconsider the cost of living seaside. 

But, the fact that homebuyers continue to spend millions to live along the coast – even after a hurricane hits shows that people have short-term memory when it comes to climate-related dangers.  Climate change effects continue to increase, making it challenging to ignore them. 

Prices High Despite Leery Lenders

Homebuyers are purchasing homes in risky areas despite lenders’ leery attitudes about them. Lenders are still loaning money for homes in risky areas, but only because they receive subsidies from the government. However, many people are paying cash for new homes, as bidding wars force home buyers to provide cash offers to get into a home they want. 

As climate change continues, especially in areas like Hialeah, Florida, the government might end up owning a bunch of homes that are underwater. If the homes are outside of 100-year flood plains, homeowners do not need flood insurance. New risky areas could create a major housing crisis when home prices plummet from permanent climate-change damage.  

Home Prices Increasing in Unexpected Areas

If coastal home prices plummet because of risks related to climate change, homes in safe zones could skyrocket. With four million or more families losing their coastal homes because of climate change, inland homes will increase in demand. As so many displaced families look for homes, the lack of inventory could force prices to levels never before seen. 

Unfortunately, homes could sit empty as people usually use the equity in their former homes to buy new homes. If people lose their homes to climate change, they also use the equity they need to buy a new home in a safe zone. If sea levels, extreme storms, and wildfires continue to ravage homes, families could lose their nest eggs without any chance of recouping their losses. 

Insurance Costs Rising or Unavailable

Another problem that homebuyers could soon face is increasing insurance costs. Some insurance companies could choose not to insure homes in high-risk coastal areas. Without insurance, lenders will not finance homes, so property owners could be on their own if they absolutely must buy a home in a coastal area like Santa Ana, CA, or Miami, FL

Climate Change Affecting People Living in Poverty

Unfortunately, climate change is not just affecting wealthy people who own coastal properties. For example, in Hialeah, Florida, climate change causes significant flooding in areas with high rental rates and low-income housing. 

People who live in poverty will struggle to recover if they lose their homes due to climate change. Remember what happened to residents of the Ninth Ward in New Orleans after Hurricane Katrina? 

The climate change crisis is real, and it will impact the prices and availability of real estate all over the United States. The crisis is coming, but action is slow. 


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