Climate Change May Cut $1.5T in Property Values
A report finds the housing market is being altered by rising home insurance costs and homebuyers factoring climate risk into their decision-making.
WASHINGTON – The effects of climate change could deal a blow to the U.S. housing market, shaving off nearly $1.5 trillion in property values over the next 30 years. That's according to a new report this week by the First Street Foundation, a nonprofit focused on the connections between climate change and financial risks.
The report finds rising home insurance costs and homebuyers factoring climate risk into their decision-making are altering the housing market.
On the whole, property values in the U.S. are likely to keep rising in the coming decades, but climate change will limit that growth, says Jeremy Porter, head of climate implications research at the First Street Foundation.
"It's really lost appreciation or lost value over the next 30 years," he said.
That loss won't be felt evenly, he noted. Housing markets in areas with weaker economies, like the Rust Belt, could take a bigger hit. Meanwhile, markets like Los Angeles, Miami and Houston — which face strong climate hazards — could actually keep growing.
"They also have a lot of amenities, and right now, those amenities are outweighing the dis-amenities of climate risk," said Porter. "And people are still moving to those areas."
That could keep pushing up home insurance rates. One way to mitigate that is to build and retrofit homes to make them more resilient to hurricanes and wildfires, according to Michael Newman with the Insurance Institute for Business and Home Safety.
"Yes, it may cost a few thousand dollars more — and I'm not underselling what that means for many families — but that can lead to longer term savings over time for them," he said.
States and cities can also encourage development in places people are likely to migrate to, said A.R. Siders, director of the Gerard J. Mangone Climate Change Science and Policy Hub at the University of Delaware. "If we do this proactively, we can actually give people a lot more options."
But whether communities across the country are up to that task, Siders said, is an open question.
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