Climate Disasters Will Take A Trillion-Dollars From US Real Estate, New Report Shows
Natural disasters and extreme weather events are becoming more frequent throughout the world. The damage that comes from these events can be unpredictable, and according to a new report the US real estate market will lose more than a trillion dollars in value, specifically from Americans moving away from riskier areas.
Property Prices in Peril is the report released from climate analytics firm First Street. The report stated that the migration of US citizens will not be a straightforward experience. Many Americans will likely continue to move to high risk areas because of their economic conditions.
The report also categorizes neighborhoods throughout the US categorically to reflect the information their reporting more easily.
“Climate abandonment areas” are cited as places where climate disaster risks are present and insurance premiums are so high that the population is declining.
“Risky growth areas” are neighborhoods with high risk for natural disaster and rising premiums, but have separate social and economic factors that are attractive for prospective buyers.
“Climate resilient areas” are popular places for Americans to move as the disaster risks and costs are more stable.
“Tipping points” refer to areas that are of risk consistently, making it so residents are considering leaving constantly.
USA Today reported that risky growth areas are projected to see a 76% population growth within the next 20 years, and climate abandonment areas will lose about 38% of their population.
One of the biggest takeaways from the First Street report is that they believe the value of real estate will decline by over $1 trillion by 2055. This will be because of residents leaving large parts of the country that have just started to see a population rise, and property values will need to adjust by declining to compensate for higher insurance costs.
“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 or something like that,” said Jeremy Porter, First Street’s head of climate implications research, to USA Today.
“Instead, what we see is within cities, people want to live around their family. 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.”
First Street’s report lists parts of the Midwest as being some of the more resilient cities currently and in the future as well.
“We definitely track all five different categories in historic patterns. I think we are seeing an increased rate of response to climate exposure, and I think a lot of it has to do with just the point that we’re at right now in a time where we’re having more frequent, more severe climate exposure events,” Porter said.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
