How climate change could affect the real estate market

April 22, 2022
Posted in Programs
April 22, 2022 derekevansteam

Every day we are seeing the negative repercussions of climate change. Earth’s average surface temperature has risen approximately 2 degrees Fahrenheit since the late 19th century, a large contributing factor being carbon dioxide emissions from human activities. It affects everything around us, including the real estate market. 

Yes, these global environmental issues really do affect real estate prices. It will also greatly influence where people migrate. Not only will people be forced out of coastal towns and cities due to the geographical complications of sea levels rising, but the economic impact on these areas will be grave as well because of their reliance on the ocean for recreation, tourism, fishing, boating, shipping, etc. (Environmental Protection Agency). Here are a few things we could see in the next 50 years (and probably sooner!) due to climate change:

Decreased home values

Essentially, as certain areas of the country become less desirable due to extreme weather events as a result of climate change, we will see people begin to move away from the shoreline and closer inland. And as we know, the hotter the location, the hotter the competition, the hotter (and more expensive) the market will become. 

Repercussions of home damage from extreme climate events

Increased frequency and severity of climate events will affect a variety of factors in a home. It will become increasingly expensive to buy home insurance in high-danger areas. Companies could even refuse to insure a home entirely if it’s located in a high risk area. 

Now, we’re not here yet, but the fallout from this is that mortgage lenders might then start factoring this into the underwriting process. Underwriters factor in the probability of defaulting when deciding if and how much they should lend to a borrower, so it’s possible the risk of a buyer losing their job or being dropped by an insurance provider would come into consideration in the underwriting process. 

Additionally, high flooding areas, flood damage, or other prior damages to homes may need to be disclosed depending on disclosure laws in the state. 

Increased carrying costs

The changes in climate will also lead to increased utilities cost. Soon it will be much more expensive to cool a home and this will raise the cost of living (or “carrying costs”) and put a strain on the electrical grid. This also includes higher insurance rates, and potentially higher property taxes due to decreasing populations in high risk areas.


The bottom line is, climate change affects everyone. We should all be aware of the increasing risk to our planet and livelihoods, and everyone should encourage their representatives to do more to combat these environmental threats. As for prospective homebuyers, it’s highly recommended that you do your due diligence and research the areas you’re thinking of moving to.