When someone mentions climate change, your first thoughts might turn to climbing temperatures. However, according to the National Oceanic and Atmospheric Administration (NOAA), climate change extends beyond temperature. The things we rely on, including water systems, energy, transportation, ecosystems, and human and animal health are all changing because of the climate.
What should the real estate community worry about most about the climate?
When it comes to the housing market, there are significant concerns real estate agents and homeowners should understand. One is the rising sea levels in coastal areas, which puts communities at a greater risk of flooding. Louisiana, Delaware and New Jersey are heavily impacted by rising sea levels, with a combined 55,400 homes at risk of severe flooding by 2030. Another rising concern is the increase in wildfires across California, Oregon and Washington, with some areas reporting more than double the frequency over the previous decade.
As a real estate agent, it is your responsibility to understand the implications of climate change and how you can best help your clients who are selling or buying in these areas.
The ways climate change impacts the real estate market:
Property values decline.
The values of properties in high risk areas are especially at risk after severe flooding or a nearby wildfire. First Street Foundation reports that coastal property values have already dropped $15.8 billion since 2005. This trend will likely continue as climate change causes more severe weather, making it more difficult for buyers to sell without taking a loss.
Buyers have less interest.
Media outlets tend to cover severe flooding, hurricanes and wildfires, putting the spotlight on the destruction and aftermath of these events. This type of attention makes these areas less desirable to potential buyers, while the experience often encourages existing homeowners to move.
Insurance costs increase.
Homeowners insurance premiums typically increase in areas that are significantly damaged by severe weather. Insurance carriers analyze historical data of claims to calculate future risk. The more the company pays in claims, the higher the risk they consider the area, and rates are adjusted accordingly.
On top of higher home insurance premiums, homeowners may need additional policies, such as flood insurance, to fully protect their investments and financial situations. Even moderate-risk flood zones have a 26% chance of flooding at least once during the course of a 30-year mortgage.
The number of real estate agents decreases.
As homes are destroyed and the housing market becomes unpredictable, some real estate agents choose to take other, more reliable paths. However, this increases the opportunity for those agents who stick it out.
Local economies become more unstable.
Storms and wildfires destroy more than than the houses in a community. They also impact businesses and the local economy. Depending on the severity, some communities struggle because businesses can't reopen, deliveries can't be made and tourism declines.
How to sell a home in areas impacted by climate change?
When it comes to selling houses in these areas, real estate agents who pay attention to local weather patterns will have more success than those who don't. Read the news every day to understand which areas are experiencing the worst effects and which neighborhoods may still be attractive to potential buyers. Spend time getting to know buyers, including their wants, expectations and long-term goals for the property. This information can help you identify those looking for a move-in-ready property versus a fixer-upper.
Once your buyers find a property, encourage them to get the home inspected. These are valuable, especially in houses that have experienced damage, because they uncover what the average person can't identify with a simple walkthrough..
Help buyers protect their new investment.
Finally, you should educate yourself on how to physically protect a home from storm damage and through the best insurance. Helping buyers, especially those new to the area, mitigate potential risk increases their comfort level with moving forward with the purchase.
While the topic of climate is controversial, real estate agents must understand the full effects it can have on the housing market. This will help you assist clients in making the best decisions for their future.