Climate change and the rising threat of natural disasters is likely to significantly impact migration plans of American families, potentially changing the landscape of American real estate.
Out of 2,000 people surveyed between Feb. 25 and March 1, 628 said they would move due to natural disasters, extreme temperatures, and rising sea levels in their area, according to real estate brokerage Redfin, which conducted the survey. Approximately 80% of the 2,000 surveyed said natural disasters would keep them from moving to a specific part of the country.
And even with fast-rising home prices and an uptick in mortgage rates, 30% of those surveyed said they wouldn’t move to an area with natural disasters or rising sea levels even if home prices were affordable.
As a whole, rising sea levels played a decision-making role for about one-third of people who plan to move in the next year, per the report.
“Climate change is making certain parts of the country less desirable to live in,” said Redfin Chief Economist Daryl Fairweather. “As Americans leave places that are frequently on fire or at risk of going underwater, the destinations that don’t face those risks will become increasingly competitive and expensive for homebuyers.”
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Age was a major factor in the final survey: Respondents aged 45 or older were less likely to indicate that natural disasters or other climate change-related issues factored into their decision to relocate, while younger buyers – aged 25-43 – indicated that natural disasters played a significant role in their home buying destination.
Only 41% of respondents in the Midwest said the increasing frequency or intensity of natural disasters played a role in their decision to move in the next year, compared with more than half of respondents in other regions – including the west coast, which has seen an exodus of movers in the past five years due to wildfires, according to Redfin’s Christopher Anderson, a California real estate agent.
“After wildfires destroyed much of Napa in 2017, the community rallied together and rebuilt, but when fires ravaged the area again in 2020, some folks just decided they were done,” Anderson said. “I had one client in St. Helena [California] whose home burned down in the last fire and only half of it was covered by the insurance company. She relocated to New York.”
Redfin said 54% of Northeast respondents said natural disasters played a role in their decision to move in the next year, along with 51% from both the South and the West.
As work-from-home became the norm throughout the U.S. during the onset of the COVID-19 pandemic, more prospective home buyers began looking at states and cities with more land and larger lots – often, for less money than in populous metro areas. Interestingly, several cities within the top 25 metropolitan statistical areas from the past year are what would be considered low-risk for natural disasters and rising sea levels, such Phoenix, Nashville, Denver, Las Vegas, and Bay City, Mich.
A growing number of sophisticated investors are also betting that climate change will dramatically impact the housing market.
David Burt, who correctly posited that the housing market was a massive bubble prior to the financial crisis and was profiled by Michael Lewis in his book “The Big Short,” is currently shorting Fannie and Freddie bonds. He believes they are overvalued because, according to his calculations, close to a third of U.S. homeowners are vulnerable to large losses in the value of their homes from climate change.
