When you think of climate change, your mind usually goes to how it’s reshaping the weather. Summers are getting longer, and winters are getting shorter in some parts of the country. Instead of putting away your mower in early October, you’re still trimming the grass around Thanksgiving. Hail storms and monsoons are arriving earlier, plus events like extreme snowfalls or Category 5 hurricanes are becoming more common.
Other events such as frequent wildfires, droughts, and rising sea levels near coastal areas are additional concerns. Changes in the weather impact the quality of life, including the ability to grow food. However, another area where climate change is reshaping matters is the real estate market. Homeownership is changing factors from affordability to where people choose to settle down. Read on to get an overview of how climate change impacts owning a home.
Higher Maintenance Costs Will Impact Affordability
When you buy a home, you’ve got to think about more than the monthly mortgage payment. What are the average utility costs? And when will you need to start replacing major components like the roof, HVAC system, and windows? Even seemingly insignificant features, such as yard size, could drain the budget over time.
Say you live in a state that already has a dry climate. Irrigating those yards isn’t an option. Plus, HOAs require owners to have and maintain inground, automated sprinkler systems. Well, climate change could exacerbate the area’s dry conditions. Think no major rain or snow showers for most of the year.
Now you’ve got to use more water year-round. Alternatively, you could spend the money to rip out the grass and xeriscape the lot. Either way, you’re spending more to maintain your property. Climate change will push owners to find new options to increase the resiliency of their properties. New mini split systems, storm-resistant windows and roofs, or foundation strengthening measures are examples.
Insurance Premiums Are Going Up
The extreme weather climate change brings means increased risk for insurance carriers. When disasters strike, the companies’ financial solvency comes under threat for one reason. There’s an uptick in the number of claims. In addition, the value of those claims is likely to be higher with severe weather-related events.
This means insurance carriers increase premiums to cover their projected costs. Furthermore, companies could decide to stop issuing new policies and renewing existing ones in high-risk areas. When carriers pull out of vulnerable states like Florida and California, it’s usually to reduce their risks or losses. The premiums state regulators allow carriers to charge aren’t enough to mitigate the risks, making leaving these states more ideal.
Property owners may need to get a home insurance quote from carriers they haven’t dealt with in the past. If your current carrier stays afloat, your premiums may go up at an accelerated rate. You might also need additional coverage due to emerging threats like wildfires and drought. Climate change does more than cause severe disasters. Rising average temperatures can make areas more susceptible to termites, sinkholes, and soil erosion, impacting structure stability.
Property Values Could Shift Dramatically
Traditionally, coastal properties cost more because of the stunning ocean views. These properties tend to be in desirable places to live, particularly as people retire or want vacation homes. Often, an in-demand location will influence average sale prices more than individual property features.
Yet, this conventional line of thinking stands to change. Rising sea levels are projected to drive people away from coastal communities. Younger populations won’t choose to live near the water and, if they do, will start to move inland. A community’s livability will become a huge factor, making areas less vulnerable to climate change more desirable.
As people flock to climate-resilient areas, it stands to spur additional relocations to these cities. Demand for services like medical care and infrastructure will grow. These factors might create 5.3 to 18 times the number of climate migrants compared to displaced residents. And home values tend to increase, sometimes dramatically, in areas with surging populations. Likewise, home values in highly vulnerable cities are likely to fall sharply as mass migrations occur.
Increased Risk May Make Ownership Less Desirable
The data on homeownership shows younger generations are having a harder time securing their first home. It’s mostly related to affordability, as rising costs and limited inventories are pricing people out. Since 1985, the prices of homes have risen twice as much as incomes. The result is potential first-time homebuyers are facing steep obstacles and choosing to remain renters instead.
But climate change will probably throw another monkey into the wrench, and not just for those looking for their first home. The chances of properties getting partially or completely destroyed by extreme weather are increasing. More frequent tornadoes, back-to-back hurricanes, and wildfires heighten the risk of loss.
Of course, the effects of these events extend beyond property loss. People become displaced, impacting their ability to work and care for their families. Even with insurance coverage, it may not make sense to rebuild or repair. Abandoned structures in communities with frequent climate-change-related events could become more common. And people may decide to relinquish homeownership or not choose it at all because of the heightened long-term risks.
Climate Change’s Impact on Homeownership
Owning a home remains part of the American dream. It’s embedded into the psyche as a sign you’ve made it in life. You’ve crossed a coveted threshold and have something you can be proud of.
While these ideals may remain ingrained in mainstream culture, the effects of climate change could challenge these aspirations. An increase in extreme weather and indirect factors that influence structural stability or property values stand to make homeownership less desirable. Additionally, owning a home may become less practical over time.
Nonetheless, one thing won’t change. People need places to call home. Entire industries, governments, and communities will need to shift their approaches to making properties sustainable.
