Climate change has been a looming issue worldwide for decades. In recent years, the United States (US) and all its residents have become increasingly aware of the incoming climate migration. With the escalated occurrences of extreme weather incidents and natural disasters nationwide, the US real estate market is expected to lose over a trillion dollars in value. Americans are moving in droves away from at-risk areas and toward locations anticipated to be more flexible and adaptable to these weather changes.
However, the great climate migration of the last few decades most likely won’t be straightforward. US citizens may continue to live in areas that endure the brunt of climate change because local offerings and desirable economic conditions progressively outweigh the climbing costs and concerns about climate risk.
Climate Report Details and What They Could Mean
First Street, a climate analytics firm, put together a report called Property Prices in Peril to discuss the effects of climate risks across the country. The agency classifies specific neighborhoods throughout the US into various handfuls.
The term “climate abandonment” represents certain areas where climate risks are high enough and insurance premiums are expensive enough for the location’s population to decline. “Risky growth” refers to areas with high climate threats, with premiums continuously rising. However, “risky growth” areas maintain social and economic components that attract people despite the perils. “Climate resilient” locations appeal to many movers because the risks and expenses remain subdued. Finally, “tipping points” are places that are dangerous enough to unsteadily sway on the possibility of decreasing the area’s population.
Among all these terms, a fifth section represents areas facing little to no climate risk while continuing to lose residents anyway. This population loss is typically due to reduced economic opportunities and advantages.
Risky growth areas include major metropolitan cities in states like Texas, with a 76% population increase projected over the next 30 years. Climate abandonment areas are expected to lose 38% of their population in the coming decades.
First Street notes that risky growth areas will see a 1.7% decrease in property values on a wide national average in the coming decades. Tampa, Florida, is reckoned as one of the most affected areas, with the potential to see a 25% decline in property prices.
Ultimately, climate abandonment locations will experience the greatest losses, averaging over 6%. First Street believes the value of real estate will decline by more than one trillion USD in 2055. This decline will partially result from many residents leaving larger parts of the US that are experiencing more growth. Another reason is that property values will adjust downhill to recoup higher insurance expenses.
Real Estate is Always Local
First Street made several additional points in its analysis of climate risk. In many cases, climate danger is extremely local. One area or metropolitan city could contain communities under a few comprehensive categories. Jeremy Porter, the head of First Street’s climate implications research, stated, “In climate migration in general, we’re still not seeing these large macro level movements of people from, you know, Houston or Miami to Minnesota or Michigan.” Most Americans understand how to navigate a big move away from riskier areas of towns to more secure ones.
Porter explained that “instead, what we see is within cities, people want to live around their families. They want to have the same job. They want the kids to go to the same schools. But they’re trying to find places that are relatively less risky in those metro areas.” Essentially, real estate experts should refer to cities and metropolitan areas as possessing low or high levels of climate risk. A risky growth spot within a specific community may have nicer schools and better houses and would ultimately become a “tipping point” before a concerning number of people leave. This process would prevent the area from transforming into a “climate abandonment” location.
Where Are America’s Climate Havens?
First Street’s Porter doesn’t overtly call any specific area a “climate haven,” but the firm’s report highlights spots in the Midwest as being the most resilient in the next three decades. At the top of the list are Franklin County, Ohio, and Dane County, Wisconsin.
That said, making projections for the future may be challenging, as climate change may accelerate the rate at which Americans consider better places to live.
