The reality of climate change, as well as the current and potential near-term effects, have become generally accepted in the United States. According to a 2020 Pew Research study, 62% of Americans said that climate change was already affecting their local community either "a great deal" or "some." And a Redfin (NASDAQ: RDFN) study found that climate change was guiding relocation efforts for many. With minimal efforts in the works to actively slow or counter climate change, it seems like many predictions about sea levels rising, increased storm activity, wildfires, and many other natural disasters may be a real threat for property owners.
Will climate change impact real estate?
For skeptics uncertain as to whether these changes will actually impact demand in their market, there's plenty of evidence to support that it will, in fact, influence both demand and sale prices. Three-quarters of those surveyed by Redfin in a 2020 homebuying survey said an increase in natural disasters related to climate change at least somewhat factors into where and whether to buy or sell a home. A study conducted by Baldauf et al was published in The Review of Financial Studies looking at climate change effects on real estate and found that for those who do believe in climate change, homes in potentially affected neighborhoods sell at a discount compared to those who don't.
What could happen?
Many natural disasters can be linked to climate change, including rising sea levels, wildfires, flooding, storm activity, and intense droughts. A property's location would indicate what kind of effects you might be on the lookout for. The McHarg Center has maps on environmental risks and major disaster lands that can be helpful in identifying potential risks. Each will have varying impacts.
For example, Zillow (NASDAQ: ZG) (NASDAQ: Z) took into consideration the impact zone of sea levels rising by six feet, which the National Oceanic and Atmospheric Administration (NOAA) predicts will happen by 2100, and found that almost 2% of all homes in the U.S. are at risk of being underwater. The following states will see the largest number of homes impacted.