Analysis has emerged that climate change will have a significant impact on the American dwellings market. The major reasons cited include rising dwelling insurance costs due to intensifying natural disasters and a growing tendency for homeowners to avoid high-risk areas.
The climate research corporation First Street projected that due to climate change causing hurricanes, droughts, and other natural disasters to intensify, the value of American dwellings will drop by $1.47 trillion (approximately 2,148 trillion won) by 2055. This research is based on an analysis of data from more than 300,000 dwellings across 39 states in the United States. According to the report, as the frequency and intensity of natural disasters due to climate change have increased over the past decade, the decline in dwelling values has also become more pronounced.
Recently, the United States has suffered significant damage from successive natural disasters. Numerous Americans are battling the aftermath of massive wildfires that struck Los Angeles (LA) this year and hurricanes that affected the southeastern region last fall.
As the damages from climate change-related disasters grow, the issue of declining dwelling values is becoming increasingly urgent. Some homeowners are attempting to escape areas that repeatedly experience disasters. The Wall Street Journal (WSJ) reported that "scientists have analyzed that climate change is exacerbating storms, wildfires, and other natural disasters, and as more Americans have been relocating to high-risk areas in recent years, the number of dwellings vulnerable to disasters has also increased." In fact, in some regions of Florida and California, dwelling insurance costs are skyrocketing, causing burdens for home buyers. Dwelling insurance costs in Florida are more than three times the U.S. average, and some insurers are refusing to accept new applicants in areas with high natural disaster risks.
First Street predicted that in the areas most affected by climate change, dwelling insurance expenses will increase, and the population will decline. Fresno County in California, Ocean County in New Jersey, and Monmouth County in New Jersey are expected to experience the most significant population declines over the next 30 years. In contrast, areas like Houston, Miami, and Tampa in Florida are predicted to see expensive dwelling insurance prices, but due to strong economies and livability, the population is expected to continue growing.
Real estate experts believe that climate change is likely to act as a new variable in the future dwellings market. A representative from the National Association of Realtors (NAR) noted that "climate risk is now directly linked not just to environmental problems but also to economic issues," adding that "as home buyers consider climate risks in their investment decisions, the volatility of dwelling prices will increase regionally."