Will Climate Change Impact Real Estate Values?

by Carole Legrain 02/09/2020

Image by Gerd Altmann from Pixabay

Natural disasters including flooding, hurricanes, mudslides and wildfires affect real estate values. Some recent examples of real estate transactions being influenced by these increasingly intense and frequent events include:

  • A Charleston, South Carolina, homeowner deciding to demolish her house after three years of flooding caused by hurricanes that led to 11 failed contracts to sell the property
  • A Redfin real estate agent in Sacramento, California, losing a sale when her clients couldn’t afford steep insurance premiums due to wildfire risk
  • A Chicago real estate investment firm hiring a Berkeley, California, firm that uses climate-change science research to predict and minimize natural disaster risks, and
  • A new form of gentrification occurring in modest Miami neighborhoods located away from shore and suffering less hurricane damage than beachfront properties.
  • The impact on property prices and salability may depend, in part, on personal beliefs about climate change.

    Divergent Perspectives

    Two studies published in 2019 about the impact of climate change on the real estate market show divergent perspectives. One from the Urban Land Institute (ULI) maintains that climate problems will financially destroy investors who don’t accurately assess potential damage from natural disasters that appear to be intensifying. It’s titled “Futureproofing Real Estate from Climate Risks” and was conducted in conjunction with a Chicago real estate investment company.

    The second study is titled “Does Climate Change Affect Real Estate Prices? Only If You Believe in It,” and is from the University of British Columbia’s Sauder School of Business. It demonstrates that climate change denial has a major impact on the prices that buyers are willing to pay for property.

    Urban Land Institute Study

    Reporting on ULI’s conclusions in April 2019, CNBC noted that the university’s study indicates large real estate companies are spending plentiful time and money on determining how climate phenomena — such as sea level rise due to warming — may affect client properties.

    In particular, the ULI study lists the following actions as essential interventions: (1) mapping risk for existing and potential holdings; (2) including climate risk analysis in decision-making about properties; (3) physically correcting properties to avoid risk; (4) mitigating loss through strategies including portfolio diversification; and (5) working with policymakers on developing disaster resilience.

    UBC Sauder Business School Report

    The UBC researchers found that in coastal areas of America at high risk of flooding and where climate change deniers are dominant, properties sold for about seven percent more than in places where climate-change believers live. They discovered stronger denial in Florida than in California. Also, they didn’t test their hypothesis in Canada or Europe, because belief in climate change is more common there.

    Climate Gentrification

    One of the most concerning impacts of climate change may be the discovery by Harvard University of a trend its researchers dubbed “climate gentrification.” They found that “historically undesirable” neighborhoods at higher elevations, such as Little Haiti, are attracting well-heeled homebuyers who want less risk of flooding. They may push up home prices beyond the means of traditional residents. 

    About the Author
    Author

    Carole Legrain

    Carole is originally from Belgium and came to the United States as an Au Pair. She lived in New York for 18 years working for the Belgian Consulate in Manhattan, also working for a distributor of custom Italian jewelry and Swiss watches. In search for a different lifestyle, she moved with her two daughters to Wilmington in 2003 where she obtained her real estate license. Carole has been an on-site agent in Porters Neck Plantation for 13 years now and truly enjoys working with all the wonderful people moving to the community from all over the country!

    Carole has 13 years of on-site experience in Porters Neck Plantation and a thorough knowledge of the community, the properties on the market and the residents who have moved there over the years. After taking a tour of the community with Carole, you will not only have a great overview of the community and the properties on the market but you will be able to meet the residents and have a good feel for the lifestyle that Porters Neck Plantation offers.

    Our Philosophy
    Treat everyone you deal with as though they are “Family and Friends”.
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    RECENT SALES

    Seller's agent 6/7/2018 - $525,000 - 8716 Lincolnshire Ln
    Seller's agent 6/07/2018 - $550,000 - 8705 Champion Hills Dr
    Buyer's agent 6/06/2018 - $431,50 - 8501 Emerald Dunes Rd
    Seller's agent 6/01/2018 - $375,00 - 8809 Sawmill Creek Ln
    Seller's agent 4/20/2018 - $490,00 - 8728 Champion Hills Dr
    Buyer's agent 4/03/2018 - $622,000 - 1001 Callawasse Island Dr
    Seller's agent 2/27/2018 - $205,000 - 920 Arboretum Dr
    Seller's agent 01/10/2018 - $315,000 - 1003 Wild Dunes Cir
    Buyer's agent 01/05/2018 - $450,000 - 1110 Tennwood Dr
    Buyer's agent 12/01/2017 - $570,000 - 8600 Fazio

    Buyer's and Seller's agent 9/07/2017 - $417,000 - 411 Black Diamond Dr
    Buyer's agent 7/18/2017 - $348,000 - 8420 Fazio Dr
    Seller's agent 6/29/2017 - $345,000 - 1102 Congressional Ln
    Buyer's agent 3/31/2017 - $230,000 - Lot 8707 Champion Hills Dr
    Seller's agent 12/27/2016 - $520,000 - 8412 Fazio Dr

    Seller's agent 12/12/2016 - $252,000 - 1002 Wild Dunes Cir
    Buyer's agent 12/04/2016 - $67,000 - Lot 625 Wild Dunes Cir
    Buyer's agent 11/16/2016 - $517,000 - 8916 Woodcreek Cir
    Buyer's agent 11/15/2016 - $162,500 - Lot 8708 Lowes Island Dr
    Buyer's agent 11/15/2016 - $348,000 - 1210 Congressional Ln

    Buyer's agent 11/07/2016 - $345,000 - 1025 Wild Dunes Cir
    Buyer's agent 9/30/2016 - $150,000 - Lot 8808 Champion Hills Dr
    Buyer's agent 7/05/2016 - $155,000 - 7216 Thurgood Rd
    Buyer's and Seller's agent 7/01/2016 - $292,500 - 1000 Wild Dunes Cir
    Buyer's agent 6/30/2016 - $350,000 - 8339 Vintage Club Cir

    Seller's agent 6/30/2016 - $439,000 - 418 White Columns Way
    Buyer's and Seller's agent 6/29/2016 - $549,000 - 8549 Galloway National Dr
    Seller's agent 6/24/2016 - $519,000 - 817 Wild Dunes Cir
    Buyer's agent 6/13/2016 - $92,000 - Lot 1800 Hartefield National Ln
    Buyer's and Seller's agent 5/16/2016 - $430,000 - 8316 Vintage Club Cir
    Buyer's agent 5/12/2016 - $67,000 - Lot 625 Wild Dunes Cir
    Seller's agent 5/03/2016 - $510,000 - 562 Windstar Ln
    Buyer's agent 3/31/2016 - $100,000 - Lot 8111 Wade Hampton Ct
    Buyer's agent 3/15/2016 - $137,500 - 1507 Military Cutoff Rd
    Buyer's agent 2/4/2016 - $641,821 - 8578 Galloway National Dr

    Seller's agent 2/01/2016 - $535,000 - 113 Hallbrook Farms Cir
    Seller's agent 10/28/2015 - $375,000 - 419 Black Diamond Dr
    Seller's agent 10/07/2015 - $549,000 - 1004 Butler National Ln
    Seller's agent 9/16/2015 - $440,000 - 8640 Vintage Club Dr
    Seller's agent 7/08/2015 - $485,000 - 409 White Columns Way
    Buyer's agent 7/02/2015 - $343,000 - 8509 Emerald Dunes Rd
    Seller's agent 5/18/2015 - $352,000 - 1102 Congressional Ln