How is All Real Estate at Risk From Climate Change?

By Daniel Brouse and Sidd Mukherjee

Climate change poses risks to real estate in the United States in various ways, and these risks can affect property values, insurance costs, and overall property resilience. Here are some ways in which all US real estate is at risk from climate change:

Sea Level Rise and Coastal Properties:
- Coastal properties are particularly vulnerable to sea level rise, storm surges, and coastal erosion. As sea levels continue to rise due to global warming, properties near coastlines may experience increased flooding and damage from more frequent and severe storms. Storm surges in Florida are an example.
Extreme Weather Events:
- Climate change is contributing to an increase in the frequency and intensity of extreme weather events, such as hurricanes, wildfires, floods, and droughts. Properties in regions prone to these events are at risk of damage, destruction, and increased insurance costs.
Temperature Extremes:
- Rising temperatures can lead to more frequent and prolonged heatwaves, affecting property infrastructure, energy demand, and potentially decreasing property values in areas with extreme heat.
Changes in Precipitation Patterns:
- Changes in precipitation patterns, including increased violent rainfall or prolonged droughts, can impact properties by causing flooding, landslides, or water scarcity. These changes may affect property values and increase maintenance costs.
Wildfires:
- Increased temperatures and changing precipitation patterns contribute to the risk of wildfires. Properties in wildfire-prone areas face threats to both their physical structures and the surrounding environment.
Homeowners and Flood Insurance Costs:
- Flood insurance will become expensive and difficult to obtain. Climate-related risks can lead to higher insurance premiums and deductibles, particularly in high-risk areas. As the frequency and severity of climate-related events increase, insurance companies may reassess risk models and adjust pricing accordingly.
Infrastructure Vulnerability:
- Climate change can impact infrastructure such as roads, bridges, and utilities. Properties relying on vulnerable infrastructure may face challenges related to accessibility, reliability, and potential increases in repair and maintenance costs.
Health Risks:
- Humans will experience greater loss and damage to life and quality of life from air pollution, decreasing supply of potable water, extreme weather events, and disease. The greatest short term climate change risk to human health is deadly humid heat (wet-bulb temperature). Climate change can affect human health, and properties in areas prone to heatwaves, air pollution, or vector-borne diseases may face increased health risks. This could influence property values and community desirability.Almost all survivors of climate-related disasters suffer from mental distress. Of those who have not experienced climate disasters, more than two-thirds of U.S. adults (68%) have reported climate change anxiety.
Regulatory Changes:
- Governments may implement stricter building codes, zoning regulations, and disclosure requirements related to climate-related risks. Non-compliance could affect property values and lead to increased costs for property owners. Loss and damage litigation against oil companies and governments will change world economics.
Shifts in Property Demand:
- Changing climate conditions may influence people’s preferences regarding where they want to live. Properties in regions with more favorable climate conditions may see increased demand, while those in areas facing more significant climate-related risks may experience decreased demand.

It’s important to note that the degree of risk varies by region and property type. Some areas may experience more immediate and severe impacts, while others may be more resilient. Assessing and mitigating these risks require a comprehensive understanding of local climate vulnerabilities and the implementation of strategies to enhance property resilience. Policymakers, real estate professionals, and property owners are increasingly recognizing the importance of addressing climate risks to ensure the long-term sustainability and value of real estate assets. Thus, our recommendation to evacuate Florida now (i.e. Managed Retreat).