Ask NYT Climate
How
can I lower my climate risk when buying a house?
?When thinking through your home-buying
decision, it's useful to think in terms of two categories of risk, according to
Jesse Keenan, a professor at Tulane University who studies the effects of
climate change on real estate.
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The
first is what could be called climate shocks. As humans burn more fossil fuels,
causing global temperatures to increase, extreme weather events like
hurricanes, floods and wildfires are becoming more frequent and intense. That
means the risk of your house being damaged or destroyed by a disaster is
growing over time.
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The
second category is climate stresses, Dr. Keenan said. More frequent and severe
disasters are forcing local governments to spend more on infrastructure
services that are funded largely through property taxes. "Taxes are only
going up with climate change," he said.
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Climate
stress also affects the cost of home insurance. The amount of money that
households paid for insurance rose faster than inflation between 2014 and 2023,
according to data compiled by Benjamin Keys, a professor of real estate at the
University of Pennsylvania's Wharton School, and Philip Mulder, a professor at
the University of Wisconsin School of Business.
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And
don't forget the potential effect of climate change on your home's long-term
value. Properties in areas at greater risk from climate change "are also
at risk of seeing a thinner pool of buyers," said Sam Chandan, founding
director of the Chen Institute for Global Real Estate at New York University's
Stern School of Business.
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There
was a period not long ago when people talked about "climate havens,"
places where some mix of geography, topography and weather patterns meant the
risk of climate shocks would be, if not zero, then close to it. People in Miami
would say that if the seas rose, they would move someplace safe, like
Asheville, N.C.
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Then
Hurricane Helene came for Asheville, emphasizing in the most painful way that
no place is immune.
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But
that doesn't mean all properties are equally exposed. Rather than think in
binary terms like risky or safe, prospective home buyers should get comfortable
with idea of degrees, Dr. Keys said.
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All
that said, does this mean a house is a bad idea now?
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Not
necessarily. Experts stress that homeownership remains, in general, a good way
to build wealth.
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The
point is, you should ask questions. Start by assessing the amount of risk
facing the property you're considering, according to Sheila Foster, a professor
at Columbia University's Climate School. One important thing to do is check
whether the property is in a federally designated flood zone.
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But
being outside a flood zone doesn't mean your risk is zero. You should also
consider your home's exposure to heat. Neighborhoods with plenty of trees and
green space will give you more options during a heat wave, keeping your home
cooler in general, and especially if your power fails.
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If
you're looking at buying a condo, ask about the building, Ms. Foster added.
Does it use efficient forms of heating? Does it meet recognized standards, like
LEED certification?
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Buying
a home was never a financial slam dunk, even before climate change became a
growing concern.
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Any
number of things could cause the value of your home to fall. Climate change
just adds to the uncertainty.
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But
in some cases, that additional risk may be too much.
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Dr.
Keenan said that in high-risk areas like coastal Florida, he would rent rather
than buy. Take the money you would have spent on insurance, maintenance and
other costs, and put it into the stock market, he said. "Your rate of
return is going to be greater."
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If
you're looking at a place facing an existential risk from sea-level rise, like
the Florida Keys or the Outer Banks of North Carolina, "you need to go in
really clear-eyed," Dr. Keys said. "These assets are not there for
the long haul."
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As
for other places, Dr. Keys said to find out how much insurance costs now. Then,
consider whether you could still afford your monthly costs if those insurance
premiums doubled or tripled.
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If
the answer is no, then maybe don't buy the house.
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Christopher
Flavelle
