It’s no secret that climate change threatens to have a long-term impact on the habitability of our planet. As the potential for floods, fires and other natural disasters gradually increases, it will eventually become more difficult for people in certain locations to live happy, healthy secure lives. And according to Bloomberg, a quick look at the housing market indicates that people are already anticipating such problems impacting their property values. A study from Attom Data revealed that average home prices in at-risk areas stagnated badly between 2007 and 2017.
Attom took an up-close look at annual changes in home prices across 3,397 cities nationwide. They found that prices were increasing everywhere, but regions with the lowest risk of floods, hurricanes, and wildfires dramatically outpaced those with the greatest risk. The average home appreciated in value by 7.3 percent over the last decade, but in coastal areas such as Florida and California, the numbers were much flatter.
“Natural disaster risk is certainly not the only factor consumers are considering when buying a home,” said Daren Blomquist, senior VP for communications at Attom. “[But there is] some evidence real estate consumers are responding to natural disaster risk, albeit somewhat erratically.”
There are exceptions to every rule. For example, Key Biscayne, Florida saw home values increase by 19 percent this past decade even though flood risk is high. Aromas, California similarly did well, even though wildfire risk is “very high.” The fact is that property buyers have a tradeoff to consider: on one hand, the risk factor in these places is high, but on the other hand, there’s a high so-called “amenity value” to living near a body of water or forest. People in different markets make different choices, so the data is inconsistent.
This story is far from over, and it continues to evolve. There’s been a great deal of speculation that when more natural disasters come in the near future, these trends in home prices and the housing market in general will speed up.
“It’s not a question of if,” said Asaf Bernstein, a professor at the University of Colorado at Boulder who’s studied this issue. “It’s a question of when.”