Flood and wildfire risk real estate markets are booming

US counties most likely to flood saw 384,000 more people move into them than out of them in the past two years, a 103% increase over that time. Similar trends are being observed in areas prone to forest fires and excessive heat as home prices have generally remained high long after the pandemic-fueled home-buying boom.

this is according to data of red finwho carried out an analysis of the migratory patterns extracted from the US Census Bureau cross reference with climate risk scores from the First Street Foundationa research-oriented non-profit organization that aims to define the risks of climate change in the US.

A combination of an explosion in remote work combined with record interest rates during the height of the COVID-19 pandemic to have people seeking more affordable housing, lower taxes, and warmer weather. this pushed migration in states like Florida, Texas, and Arizona, even though these states carry higher levels of risk of extreme heat, wildfires, drought, and storms.

“It’s part of human nature to focus on current benefits, like ocean views or a low cost of living, rather than costs that could accrue over the long term, like property damage or a decline in property value,” said Redfin Deputy Chief Economist Daryl Fairweather. “It’s also part of human nature to dismiss risks that are hard to measure, like climate change.”

While the US continues to reckon with housing supply issues, disaster-prone areas typically have a higher number of available homes, leading to reduced prices. But much of the construction activity is also concentrated in areas associated with higher weather-related risks.

“America is building more and more homes in places threatened by climate change; More than half (55%) of homes built so far this decade face fire risk, while 45% face drought risk, a separate Redfin analysis found,” the data explains. “By comparison, only 14% of homes built between 1900 and 1959 are at risk of fire and 37% are at risk of drought. New homes are also more likely than older homes to face the risk of heat and flooding.”

Homeowners and renters may not have felt the full impact of weather-related disasters since they often don’t end up paying directly for renovations or repairs needed by a severe weather event, Fairweather said.

“Insurers and government programs often subsidize the cost of rebuilding after storms, and mortgages mean that homeowners are ceding some of the risk to lenders, especially if their home is foreclosed upon after a storm,” he explained. “But with the intensification of natural disasters and the withdrawal of insurers from disaster-prone areas like Florida and California, Americans may begin to feel a greater sense of urgency to mitigate weather hazards, especially if their home values ​​are at risk of declining.”

Which, for many Americans surveyed by Redfin, is a concern. According to a survey of approximately 2,000 U.S. residents commissioned by Redfin and conducted by Qualtrics in May and June 2023, nearly half (48.7%) of respondents who moved in the past year believe that increasing frequency or intensity of weather events such as natural disasters, excessive temperatures, and/or sea level rise “will likely affect home values ​​in their area over the next 10 years,” according to the data.

Among the top migration destinations hardest hit by climate risk, coastal Florida has seen nearly 60,000 more people come in than leave in the past two years. This includes areas like Lee County, which includes Fort Myers and Cape Coral. The area was recently devastated by Hurricane Ian in September.

Meanwhile, inland California, Utah and Arizona have seen their populations increase as the risk of wildfires increases, Redfin found.

Recently, leading insurance companies have he left some of these areas. farmers insurance Announced earlier this month that it will stop providing coverage in Florida, while state farm and allstate are pulling back on coverage types in California. All of the exiting companies have cited climate risk to explain these decisions.

Add Comment