People are feeling the effects of the overheating planet more and more every day — and not just in the air, water, and soil around them, but in their wallets too.
According to analysis from research group First Street, shared in a guest essay for The New York Times, many property values are predicted to tank over the next three decades due to climate risks.
What are the climate-related housing trends?
There has been no shortage of extreme fires, floods, and storms in the United States lately, which have devastated homeowners to the collective tune of hundreds of billions of dollars. The frequency of these disasters has driven up the cost of owning a home and of insurance for those properties, as First Street observed.
However, there's another trend — one with a longer timescale — that isn't talked about enough. Going forward, those sky-high home values may have nowhere to go but down because of climate pressures — especially in the nation's most vulnerable places.
Why are falling home prices important?
As First Street detailed, today's average home will be worth 6% less in 30 years. The group values that total depreciation at "nearly $1.5 trillion in asset losses."
On the other hand, insurance premium increases show no signs of slowing down. The report projects that those costs could jump up another 29% over the next 30 years on average, fueled by the same climate pressures causing home values to plummet.
The consequences of this radically shifting housing market will be monumental for Americans. Owning a home has long been a primary avenue for people to build economic stability — and a rewarding dream to save up for — but those basic assumptions are changing along with the climate.
How did we get here?
This bleak image of America's near future may seem sudden, and there's a reason for that, according to Matthew Kahn, an economist at the University of Southern California.
Kahn pointed out that while climate risks increased, states fought to keep insurance pricing low for the good of the consumer. In turn, those subsidies "muffled the free market price signals" and "slowed down our adaptation," effectively making dangerous places seem safe.
Indeed, First Street found that insurance prices for 39 million properties in the continental U.S. are too low for how vulnerable they are. The spike in premiums today, then, is more like a catching up of costs.
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Definitely 🙁 The bottom line
As these economic trends play out, one thing is for sure: People are going to move if they can. Precise climate migration is difficult to model, but First Street predicted that more than 55 million Americans will move due to climate pressures over the next three decades.
Meanwhile, people will need to pay more for their down payments or rent bills. However, properties in safer areas could stand to benefit, as First Street found that their values go against the overall trend and may rise 10% in the coming decades.
No matter what, taking steps to minimize the impacts of extreme weather — such as pushing for planet-friendly legislation or switching your home to clean energy — is well worth the time and money. As First Street's report has made clear, the alternative is far more expensive.
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