How Climate Change May Threaten Real Estate Values

by Jacqui Zuzgo 07/11/2021

Image by Gerd Altmann from Pixabay

Natural disasters including flooding, hurricanes, mudslides and wildfires affect real estate values. Some recent examples of real estate transactions being influenced by these increasingly intense and frequent events include:

  • A Charleston, South Carolina, homeowner deciding to demolish her house after three years of flooding caused by hurricanes that led to 11 failed contracts to sell the property
  • A Redfin real estate agent in Sacramento, California, losing a sale when her clients couldn’t afford steep insurance premiums due to wildfire risk
  • A Chicago real estate investment firm hiring a Berkeley, California, firm that uses climate-change science research to predict and minimize natural disaster risks, and
  • A new form of gentrification occurring in modest Miami neighborhoods located away from shore and suffering less hurricane damage than beachfront properties.
  • The impact on property prices and salability may depend, in part, on personal beliefs about climate change.

    Divergent Perspectives

    Two studies published in 2019 about the impact of climate change on the real estate market show divergent perspectives. One from the Urban Land Institute (ULI) maintains that climate problems will financially destroy investors who don’t accurately assess potential damage from natural disasters that appear to be intensifying. It’s titled “Futureproofing Real Estate from Climate Risks” and was conducted in conjunction with a Chicago real estate investment company.

    The second study is titled “Does Climate Change Affect Real Estate Prices? Only If You Believe in It,” and is from the University of British Columbia’s Sauder School of Business. It demonstrates that climate change denial has a major impact on the prices that buyers are willing to pay for property.

    Urban Land Institute Study

    Reporting on ULI’s conclusions in April 2019, CNBC noted that the university’s study indicates large real estate companies are spending plentiful time and money on determining how climate phenomena — such as sea level rise due to warming — may affect client properties.

    In particular, the ULI study lists the following actions as essential interventions: (1) mapping risk for existing and potential holdings; (2) including climate risk analysis in decision-making about properties; (3) physically correcting properties to avoid risk; (4) mitigating loss through strategies including portfolio diversification; and (5) working with policymakers on developing disaster resilience.

    UBC Sauder Business School Report

    The UBC researchers found that in coastal areas of America at high risk of flooding and where climate change deniers are dominant, properties sold for about seven percent more than in places where climate-change believers live. They discovered stronger denial in Florida than in California. Also, they didn’t test their hypothesis in Canada or Europe, because belief in climate change is more common there.

    Climate Gentrification

    One of the most concerning impacts of climate change may be the discovery by Harvard University of a trend its researchers dubbed “climate gentrification.” They found that “historically undesirable” neighborhoods at higher elevations, such as Little Haiti, are attracting well-heeled homebuyers who want less risk of flooding. They may push up home prices beyond the means of traditional residents. 

    About the Author
    Author

    Jacqui Zuzgo

    I have been a REALTOR® in Massachusetts since 1984 and hold both a salesman and broker license. I am currently affiliated with Five College REALTORS® located at 190 University Drive, Amherst, MA. Over my career, I have consistently been a Top Producer in the Pioneer Valley and have gained a reputation for being a strong-minded, no-nonsense negotiator in the industry. I also frequently rank highly on Boston’s Top 20 for sales in Western Massachusetts. Some of my best qualities include my listening and communication skills. I have time and again proven to work well under pressure with exceptional attention to detail. My commitment to my clients and professionalism is obvious in every transaction.

    Representing both buyers and sellers in Hampshire and Franklin Counties, as well as assisting in relocations throughout the United States and globally has helped me embrace the need for quality performance and develop an acute and sincere sensitivity to people's needs. Honing in on what matters most is almost a sixth sense. Communication and awareness of the situation at hand produce a final result that has undoubtedly led to the large referral business I maintain.

    Education has been a theme throughout my 30 years of experience. Well versed in technology and holding key designations have proven to be assets to my performance and dedication to the Real Estate field. My never-ending enthusiasm, availability, knowledge and drive make for a seamless transaction every client, every time.

    I am a native of the Pioneer Valley. I am committed to sharing all the area has to offer in making your transition, whether long distance or short, a satisfying experience.

    Education:

    • University of Massachusetts, Amherst - Bachelor of Science 1983
    • Top Individual Seller for Residential Sales in the Pioneer Valley since 2006.
    • #1#1 Realtor in the entire Franklin/Hampshire Counties for Millions Sold since 1999.
    • Highest producer in sales since 2004 in Franklin/Hampshire Counties.
    • ABR®– Accredited Buyer's Representative
    • CRS – Certified Residential Specialist (only 3% of REALTORS® hold a CRS)
    • e-PRO – Digital Marketing, Certified e-PRO Realtor®
    • GRI – Graduate, Realtors® Institute
    • SRES– Seniors Real Estate Specialist®

    Biographical Highlights:

    Life long, active member of the community, born & raised in the Pioneer Valley. Graduate of University of Massachusetts, Amherst, BS 1983.

    Current Committee Involvement:

    Member of the local Chamber of Commerce - Post Board of Director's member Volunteer for the Road to Recovery.

    Greenfield Community College Foundation Board Member 

    Greenfield Savings Bank Corporator

    MLS Professional Standards Committee Member

    Have a question for Jacqui? Jacqui's email: [email protected]