More and more questions from readers are in this version. How should the increased risk from climate change affect my decision to buy a home? Or, where should you buy a house, and what should you keep in mind?
Insurance costs in some parts of the country are far above inflation, so it seems particularly urgent now. This is advice from experts.
What are your concerns?
When considering your home buying decision, it is useful to think in terms of risk in two categories, according to Jesse Keenan, a professor at Tulane University who studies the impact of climate change on real estate.
The first is what is called a climate shock. As humans burn more fossil fuels and global temperatures rise, extreme weather events such as hurricanes, floods and wildfires become more frequent and intense. In other words, the risk of being damaged or destroyed by disasters is growing over time.
The second category is climate stress, Dr. Keenan said. More frequent and severe disasters have forced local governments to spend more on infrastructure, mostly storm pumps and hardening of critical facilities, services funded primarily through property taxes. “Taxes are just accompanied by climate change,” he said.
Climate stress also affects the costs of home insurance. The amount of households paid for insurance increased faster than inflation between 2014 and 2023, according to data compiled by Benjamin Keys, a real estate professor at the University of Pennsylvania Wharton School, and Phillip Mulder, a professor at the University of Wisconsin. did. Business school.
And don't forget about the potential impact of climate change on the long-term value of your home. Samchandan, founding director of the Institute of Global Real Estate at New York University Stern School of Stern, said:
Can I buy something “safe” somewhere?
There was a time ago when people were talking about “climate change.” A mix of geography, topography and weather patterns meant that the risk of climate shocks was near, if not zero. As a reporter, I've heard people in Miami say that if the ocean rises, they'll move somewhere safe like Asheville, North Carolina.
Hurricane Helen came to Asheville to highlight that she was unimmunized in the most painful way.
But that doesn't mean that all properties are equally exposed. Rather than binary terms like risk or safe, future home buyers should be happy with the idea of a degree, Dr. Keys said.
And exposure to climate risks is not just something to consider. Some cities and towns are doing a better job of protecting against climate threats, Dr Chandan said. This can take the form of stricter building standards and reduce damage caused by wildfires and floods.
Does that mean that the house is a bad idea now?
That's not necessarily the case. Experts emphasize that homeownership is generally a good way to build wealth.
The key is that you need to ask questions.
Start by assessing the amount of risk you are facing with the property you are considering, according to Sheila Foster, a professor at Columbia University's School of Climate. One important thing is to check if the property is in a federally designated flood zone.
But being outside the flood zone doesn't mean you have zero risk. You should also consider that your home will be exposed to heat. A neighborhood with lots of trees and green space offers more options during the heat wave, and your home will generally keep your home cool, especially if your power fails.
If you are considering purchasing a condominium, ask about the building, Foster added. Do you use efficient heating? Do you meet recognized criteria such as LEED certification?
Think carefully in some places.
Even before climate change became a growing concern, buying a home was never a financial slam dunk.
Many things can cause the value of your home: a change in your neighborhood, or a burst of construction of a new home nearby. Climate change adds to uncertainty.
But in some cases, that additional risk can be too much.
Dr. Keenan said in high-risk areas like the Florida coast, you rent rather than buy. He said you took the money you spent on insurance, maintenance and other expenses and put it in the stock market. “Your rate of return will be even greater.”
If you're looking at places like Florida Keys or North Carolina's Outer Banks, where you're facing existential risks from rising sea levels, “it really needs to be clear,” Dr. Keys said. “These assets have not been there for a long time.”
For other locations, Dr. Keys provided this rule of thumb. Find out your current insurance costs. Next, consider whether you can afford to pay monthly expenses if these premiums double or triple.
If the answer is no, don't buy a house.
