The Smart Money is Considering the Effects of Climate Change on Real Estate

Savvy homebuyers are thinking about more than just school zones and ROI – increasingly, they’re factoring for potential climate effects and the many seen and unforeseen costs associated with that. That means considering things like wildfire, drought, heatwave, and flood risks. But is it affecting the market just yet? Read on!

The Climate Change Effect

In short, not really. So far, even parts of the country that are vulnerable to climate change don’t seem overly affected. That might be because homeowners aren’t planning on staying in a particular home for the long term, or factoring for the effects of climate change isn’t even on their radar. Still, considering the fact that buying a house is typically the biggest financial transaction most of us will ever make, it’s worth thinking this through.

The Insurance Wild Card

In fact, the idea of sustainability is increasingly being featured as a selling point. Insuring a home in certain areas could become cost-prohibitive, rendering a home virtually unsellable. So before making an offer, get an evaluation from a few different insurance companies. Things like solar panels, storm-proof windows, distance from rising sea levels, or defensible space may all become sought-after benefits that mean lower rates.

The Impact on Mortgage Rates

Something else to think through – lenders are watching insurance companies closely. If an insurance company has a climate-based reason not to offer a policy, it’s not unfeasible to assume that mortgage companies might follow their lead. It’s still mostly a theory at this point, but it’s worth keeping in mind.

The Agent’s Take

Guiding buyers through the homebuying process shifts somewhat when you start factoring for the implications of climate on a given property. It means looking at a home through a different lens – is it prone to flooding, consider those 100-year flood events are becoming a more regular occurrence? What sort of climate-related damage has occurred in the area in recent history and what was the community’s reaction? This is the kind of information that sellers might be reluctant to share, and it’s important that your agent has the wherewithal to ask. Disclosure laws vary significantly from one area to the next, so lean on your agent for insight here. Another avenue for information? Visit for a free climate risk assessment in the area you’re considering.

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