Will climate change make your house worthless?

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Climate change may already be affecting your biggest investment. Rising sea levels are driving home prices down, a study by researchers at the Wharton School of the University of Pennsylvania finds.

Philip Mulder, a doctoral candidate at Wharton, and Benjamin Keys, a professor of real estate at the school, looked at home sales in coastal Florida from 2013 through 2020. They compared real estate markets that are threatened by sea level rise to markets that are not as threatened by sea level rise. They found drops in prices and the number of home sales in threatened areas, as buyers became more pessimistic about climate change.

Relative sales volumes in at-risk areas fell as much as 20% from 2013 to 2018. Prices stayed steady over that period, but fell by about 5% relative to less-exposed areas from 2018 to 2020.

Mulder says divided views on climate change might be why prices were slow to fall. While people who are worried about climate change might pay less for a house on the coast or avoid buying it altogether, climate change skeptics will still be happy to buy.

“There’s still a market and the people in this market are entirely optimistic about what’s going to happen to the housing market in those areas,” Mulder said.

A home is likely the most expensive thing you’ll ever buy. If you’re worried about how climate change will affect the value of your home or the home you want to buy, here’s what to do.

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Is your home at risk?

Whether you own a home or are looking to buy one, you should first learn about its flood risk. Government data is a good place to start. The National Oceanic and Atmospheric Administration’s Sea Level Rise Viewer can show you how water levels up to 10 feet above present day will impact your home.

Mulder also pointed to a newer tool called Flood Factor. Flood Factor was created by First Street Foundation, a nonprofit that researches flood risk. In addition to risk from sea level rise, it also models flooding from tides, storm surges, rivers and rainfall. Realtor.com and Redfin.com have integrated Flood Factor data into their real estate listings.

“It’s where I found out my rental unit, which is near the Schuylkill River (in Philadelphia), is at some risk of basement flooding,” Mulder said.

Flood Factor’s bases its models on measurements from tides and streams across the country combined with global climate models, said Jeremy Porter, head of research and development at First Street Foundation. The data show that more than 16 million properties have flood risk, including many far from the coast.

What to do with the data

So what if your home or the home you want to buy is a flood risk? There are ways of protecting your property, but they range in cost. Simply cleaning your gutters can mitigate flooding by directing water away from your home. In many areas, homeowners have elected to elevate their homes, but that can cost as much as the home itself, Porter said.

A standard mortgage lasts 30 years, so consider the long-term costs and benefits, Mulder said.

“Think about the investments you have to make and the time horizon over which this house might continue to be a solid investment,” he said.

If that cost doesn’t outweigh the value of living there, it might be time to cut your losses and move, he said. Some areas offer buyouts to people in flood-prone areas.

Monique Coleman bought her home in Woodbridge, New Jersey, in 2004 without realizing it flooded frequently. After years of watching her home’s value drop and the cost of insuring it against flood damage rise, she and other members of the community lobbied her local government to take part in the state’s Blue Acres program, which offered buyouts to Coleman and many of her neighbors.

She ended up selling her home to the state for $287,000, less than the $305,000 she had bought it for.

“If we didn’t take the buyout and I tried to sell the home, then I would have just been replicating the cycle of repetitive flood loss and damage,” Coleman said. “I just didn’t want anyone else to be in that situation.”

Flood insurance

One way to protect yourself from the financial damage of flooding is insurance. A standard homeowners insurance policy won’t cover flood damage, so you’ll need a separate policy.

While there are some private providers, the main provider of flood insurance is the U.S. government. And it’s often a good deal because it’s heavily subsidized, Porter said, though updates to the National Flood Insurance Program coming in October will make it more expensive.

If your home is in a federally recognized flood zone you may be required to buy NFIP coverage, but it’s worth considering even if you’re not, since the federal flood maps may be out of date, Porter said.

One thing’s for sure: When it comes to flood risk, the time to act is now. Climate change isn’t going away.

“We can already quantify the effects on the housing market,” he said. “We can already quantify the effects on the water levels that we’re measuring. It’s definitely something that is happening and it’s something you should take into account when you’re projecting out 30 years.”

This article originally appeared on Policygenius.com and was syndicated by MediaFeed.org.

More from MediaFeed.org:

US housing markets most at risk from climate change

 

As the effects of climate change grow increasingly prevalent, they become harder and harder to ignore, especially when making a significant investment like buying a house. The National Resource Defense Council (NRDC) reported in 2019 that rising sea levels will be a significant driving force in displacing populations globally. In fact, the NRDC estimates that between 4.2 and 13.1 million Americans could be forced to move due to climate change by the end of the twenty-first century; countless miles of land in the United States will become unlivable within the next 80 years.

Individuals on the market for buying a house in the United States have reported varying levels of concern about how climate change may affect where they choose to live. A recent report from the New York Times detailed a decline in property sales in high-risk areas in Florida following 2013, when the aftermath of Hurricane Sandy left many potential buyers reeling after witnessing the tangible effects of climate change. However, the housing market landscape in at-risk areas varies throughout the country. In some cities, home sales are virtually unimpeded by the impending possibility of sea level rise. According to a November 2020 report by Politico, lenders have continued to issue mortgages in these at-risk neighborhoods without hesitation, indicating that movement into these regions is still active.

 

Tim Gray / istockphoto

 

The subsidization of these risky properties is cause for concern for climate scientists and economists alike, because the overvaluation of homes in these risky areas could lead to the devaluation of property, potentially prompting a major housing crisis. Many economic and regional planning experts have called on the government to enact stricter regulations that account for the effects of climate change in higher-risk areas in order to prevent a widespread housing crisis and bolster protection for vulnerable populations.

We are past the tipping point when it comes to reckoning with climate change. Sea level rise, flood, and wildfires are all current realities across the country, and will only continue to shape the future of where we build our communities. To understand how the effects of climate change may impact real estate markets in the United States, the research team at Insurify consulted data from the University of Notre Dame to identify cities whose housing markets are most at risk for climate change.

 

RoschetzkyIstockPhoto / istockphoto

 

Out of the 280 U.S. cities surveyed, the average Overall Climate Change Risk Level Score is 42.05 out of 100. The average flood risk is 38.26 out of 100, and the average drought risk is 46.01 out of 100.

Across metropolitan areas in the U.S., designated by Redfin as combined statistical areas with at least 500 users, the median sale price of homes on the market grew by 22.71% year-over-year, as of October 2020. Likewise, the number of homes sold year-over-year as of October 2020 increased by 27.44%.

 

DepositPhotos.com

 

Perhaps unsurprisingly, the twenty cities whose housing markets are most susceptible to the effects of climate change are coastal, with the notable exception of Chicago. While Chicago is not on an oceanic coast, it is on the coastline of Lake Michigan, leaving the city susceptible to similar outcomes as cities on an ocean shoreline.

Coastal cities are more at risk than inland cities, according to the World Economic Forum. Increasing temperatures cause sea level rise, which contributes to flooding, erosion, and saltwater intrusion into surface and groundwaters. The urgent impact of these climate change hazards means that cities on the coast are seeing the effects of global warming more immediately than non-coastal cities. However, landlocked cities are not impervious to the effects of climate change. In fact, climate scientists have predicted that inland migration will increase as rising sea levels continue to affect more shoreline communities. One study from the University of Southern California projects that popular cities for relocation may be such inland metropolitan areas as Atlanta, Houston, Dallas, Denver, and Las Vegas.

 

garytog / istockphoto

 

All 20 cities on the list have one thing in common: year-over-year positive increases for home sales and home prices. However, for many of the cities on the list, the growth on both of these metrics does not exceed the national average. The pandemic has certainly changed the landscape of homebuying in the U.S. in 2020, driving sales in suburban and rural areas at unprecedented levels. However, on the yearly long-term scale, none of these cities have experienced a relative decline in their home sales or market prices, according to the data from October 2020. It’s important to note the difference between relative growth and rate of growth — while these cities experienced positive year-over-year growth between 2019 and 2020, the rate at which home sales or prices changed may not necessarily have been positive.

 

Feverpitched/ istockphoto

 

To identify the housing markets most susceptible to the effects of climate change, the data science team at Insurify referred to two publicly available data sources. Overall climate change risk level for each city was derived from the University of Notre Dame’s Urban Adaptation Assessment, launched by the Notre Dame Global Adaptation Initiative in 2018. The Urban Adaptation Assessment includes data and risk calculations for climate change hazards (heatcoldfloodsdroughts, and sea level rise) and the economicsocial, and governance measures in place to combat them in 280 U.S. cities across 48 states. The Overall Climate Change Risk score, which is the basis for the rankings’ order, was calculated by the UAA by taking the average of each city’s scores of each hazard.

The second source used by Insurify’s data scientists is Redfin’s Housing Market Data. Redfin, a national real estate brokerage, collects real estate market metrics on a monthly basis across multiple geographic levels in the United States. The relative growth of median sale prices of homes and of the number of homes sold year-over-year for each city on the list are taken from Redfin’s most recent year-over-year estimates as of October 2020. For some noted cities on the list, the growth of median sale price and of the number of homes sold year-over-year were taken from that city’s greater metropolitan area.

Here are the housing markets most at-risk for climate change.

 

DepositPhotos.com

 

  • Overall Climate Change Risk Level: 61.71 out of 100
  • Flood risk: 55.82 out of 100
  • Drought risk: 64.67 out of 100
  • Median Home Sale Price Growth (YoY): +13.4%
  • Home Sales Rate (YoY): +32.8%

 

ChrisBoswell / istockphoto

 

  • Overall Climate Change Risk Level: 61.73 out of 100
  • Flood risk: 42.59 out of 100
  • Drought risk: 77.76 out of 100
  • Median Home Sale Price Growth (YoY): +12.4%
  • Home Sales Rate (YoY): +12.2%

 

DepositPhotos.com

 

  • Overall Climate Change Risk Level: 61.94 out of 100
  • Flood risk: 77.90 out of 100
  • Drought risk: 45.31 out of 100
  • Median Home Sale Price Growth (YoY): +11.5%
  • Home Sales Rate (YoY): +16.4%

 

THEPALMER

 

  • Overall Climate Change Risk Level: 62.36 out of 100
  • Flood risk: 46.95 out of 100
  • Drought risk: 78.39 out of 100
  • Median Home Sale Price Growth (YoY)*: +10.0%
  • Home Sales Rate (YoY)*: +17.8%

*Estimates from the greater New York-NJ Metro Area

 

f11photo/ istockphoto

 

  • Overall Climate Change Risk Level: 63.09 out of 100
  • Flood risk: 30.73 out of 100
  • Drought risk: 82.52 out of 100
  • Median Home Sale Price Growth (YoY)**: +14.0%
  • Home Sales Rate (YoY)**: +12.1%

 

MattGush / istockphoto

 

  • Overall Climate Change Risk Level: 64.56 out of 100
  • Flood risk: 57.81 out of 100
  • Drought risk: 68.27 out of 100
  • Median Home Sale Price Growth (YoY)**: +14.0%
  • Home Sales Rate (YoY)**: +12.1%

**Estimates from the greater Los Angeles Metro Area

 

Esme7 / istockphoto

 

  • Overall Climate Change Risk Level: 64.75 out of 100
  • Flood risk: 28.88 out of 100
  • Drought risk: 72.79 out of 100
  • Median Home Sale Price Growth (YoY): +14.4%
  • Home Sales Rate (YoY): +33.2%

 

DepositPhotos.com

 

  • Overall Climate Change Risk Level: 65.16 out of 100
  • Flood risk: 32.07 out of 100
  • Drought risk: 66.69 out of 100
  • Median Home Sale Price Growth (YoY)**: +14.0%
  • Home Sales Rate (YoY)**: +12.1%

**Estimates from the greater Los Angeles Metro Area

 

MattGush / istockphoto

 

  • Overall Climate Change Risk Level: 65.17 out of 100
  • Flood risk: 25.14 out of 100
  • Drought risk: 75.31 out of 100
  • Median Home Sale Price Growth (YoY)**: +14.0%
  • Home Sales Rate (YoY)**: +12.1%

**Estimates from the greater Los Angeles Metro Area

 

Laura Fay / istockphoto

 

  • Overall Climate Change Risk Level: 66.37 out of 100
  • Flood risk: 38.23 out of 100
  • Drought risk: 71.64 out of 100
  • Median Home Sale Price Growth (YoY)**: +14.0%
  • Home Sales Rate (YoY)**: +12.1%

**Estimates from the greater Los Angeles Metro Area

 

MattGush / istockphoto

 

  • Overall Climate Change Risk Level: 66.56 out of 100
  • Flood risk: 47.94 out of 100
  • Drought risk: 57.73 out of 100
  • Median Home Sale Price Growth (YoY): +23.5%
  • Home Sales Rate (YoY): +29.2%

 

SeanPavonePhoto

 

  • Overall Climate Change Risk Level: 66.65 out of 100
  • Flood risk: 68.31 out of 100
  • Drought risk: 54.89 out of 100
  • Median Home Sale Price Growth (YoY): +12.9%
  • Home Sales Rate (YoY): +8.6%

 

espiegle/istockphoto

 

  • Overall Climate Change Risk Level: 66.85 out of 100
  • Flood risk: 43.95 out of 100
  • Drought risk: 81.38 out of 100
  • Median Home Sale Price Growth (YoY)*: +10.0%
  • Home Sales Rate (YoY)*: +17.8%

*Estimates from the greater New York-NJ Metro Area

 

ablokhin / istockphoto

 

  • Overall Climate Change Risk Level: 68.10 out of 100
  • Flood risk: 61.66 out of 100
  • Drought risk: 80.84 out of 100
  • Median Home Sale Price Growth (YoY): +39.4%
  • Home Sales Rate (YoY): +71.3%

 

DepositPhotos.com

 

  • Overall Climate Change Risk Level: 68.66 out of 100
  • Flood risk: 54.79 out of 100
  • Drought risk: 72.07 out of 100
  • Median Home Sale Price Growth (YoY): +15.6%
  • Home Sales Rate (YoY): +24.0%

 

Ultima_Gaina / istockphoto

 

  • Overall Climate Change Risk Level: 71.79 out of 100
  • Flood risk: 32.70 out of 100
  • Drought risk: 80.41 out of 100
  • Median Home Sale Price Growth (YoY)**: +14.0%
  • Home Sales Rate (YoY)**: +12.1%

**Estimates from the greater Los Angeles Metro Area

 

RenderedSpeechless / istockphoto

 

  • Overall Climate Change Risk Level: 77.22 out of 100
  • Flood risk: 70.62 out of 100
  • Drought risk: 68.39 out of 100
  • Median Home Sale Price Growth (YoY)*: +10.0%
  • Home Sales Rate (YoY)*: +17.8%

*Estimates from the greater New York-NJ Metro Area

 

Brian Logan / istockphoto

 

  • Overall Climate Change Risk Level: 78.09 out of 100
  • Flood risk: 84.40 out of 100
  • Drought risk: 86.17 out of 100
  • Median Home Sale Price Growth (YoY)***: +12.9%
  • Home Sales Rate (YoY)***: +8.6%

***Estimate from the greater Miami Metro Area

 

LuisFidelAyerves / istockphoto

 

  • Overall Climate Change Risk Level: 79.64 out of 100
  • Flood risk: 54.90 out of 100
  • Drought risk: 86.17 out of 100
  • Median Home Sale Price Growth (YoY)**: +14.0%
  • Home Sales Rate (YoY)**: +12.1%

**Estimates from the greater Los Angeles Metro Area

This article originally appeared on Insurify.com and was syndicated by MediaFeed.org.

 

Zillow.com

 

Featured Image Credit: RoschetzkyIstockPhoto / istockphoto.

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Myles Ma

Myles Ma is an editor at PolicyGenius.com.