How Does Climate Change Affect Real Estate?

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Climate change is one of our most pressing global issues, with far-reaching impacts on many aspects of our lives, including the real estate sector. Yet, surprisingly, most property buyers don’t grasp just how significant climate change is to the real estate industry.

As temperatures continue to rise, extreme weather events like hurricanes, heat waves, droughts, and flood risks become more frequent and severe, leading to increased damage to homes, businesses, and infrastructure. These physical changes to the landscape are already affecting the value and desirability of certain properties, and they’re likely to become increasingly significant in the coming years. As the impacts of climate change continue to grow, it’s clear that the real estate industry must take action to address this growing threat.

Are you considering how climate change will impact where you live and invest? If not, you need to be. The world’s climate is changing, and so are weather patterns. It’s an unfortunate reality that climate risk exists, and natural disasters need to be considered when it comes to buying and managing real estate.

How serious is climate change?

2020 was a wake-up call for the world, as it statistically tied with 2016 for the hottest year on record since modern recordkeeping began in 1880. According to NASA’s Global Institute for Space Studies and independent analyses by the Climatic Research Unit and the National Oceanic and Atmospheric Administration, our planet is getting hotter at an alarming rate. This rise in temperature is causing more frequent and severe weather events such as extreme storms, rising seas, droughts, heat waves, and wildfires.

These devastating consequences cause damage to homes, businesses, and infrastructure, but also the displacement of communities and loss of life. Coastal communities are facing a new threat as rising sea levels threaten widespread flooding. The reality of climate change can no longer be ignored.

Billion-dollar disasters are growing more common, especially on the Gulf Coast.

Billion-dollar disasters are becoming a new normal across the world, with the Gulf Coast experiencing a disproportionate share of these extreme events. Whether hurricanes, floods, or wildfires, these disasters not only cause immeasurable harm to people and communities but also carry a massive financial toll. The rising frequency of these events is a clear indicator of the growing threat posed by a changing climate. As global temperatures continue to rise, we can expect to see more frequent and intense natural disasters that will only add to the economic and social costs of inaction. For Gulf Coast communities, this means that preparing for and mitigating the impact of these disasters must be a top priority.

Climate change and its environmental factors.

Climate change is not the only risk to real estate. As temperatures rise, new environmental factors come into play. Therefore, real estate owners need to be aware of possible environmental factors that might impact their property or the area it is in.

Air Pollution: An invisible threat to real estate.

With air pollution levels rising, it’s no secret that this invisible threat poses a serious risk to both human health and the real estate industry. It is caused by various sources, including industrial emissions, transportation, and energy production. You might not think that air pollution would significantly impact real estate, but you’d be wrong. The growing health and wellness sector is making buyers and tenants aware of the consequences of poor environmental conditions. It was found that 11.65% of global deaths were a consequence of air potions. It is responsible for a number of leading causes of death, including heart disease, stroke, lung cancer, and COPD.

Areas with high levels of air pollution are facing potential consequences, including lower property values, decreased marketability, and even a reduction in the quality of life for residents. Home buyers and real estate investors must consider this potential risk when looking for their next acquisition. When building new construction, developers should also take proactive measures to forecast how air pollution will impact their development.