Why Climate Change is the Hidden Factor Shaping Your Home ownership Dreams

As a top selling broker at Realogics Sotheby’s International Realty in Bellevue, Washington, I am frequently asked by potential buyers, “Do you think I’ll ever be able to buy a home here?” And frankly, it’s not an easy question to answer. Housing prices in the Seattle area continue to climb, making home ownership feel like an elusive dream for many. The demand far exceeds the supply. People are increasingly willing to look further out in search of a home. They trade shorter commutes for the opportunity to own a home of their own, or even move out of state.

But here’s the twist: the dynamic may be about to shift in unexpected ways. Historically, many buyers have flocked to the Sun Belt, attracted by lower housing prices, better weather, and cheaper insurance rates. However, things are changing due to the effects of climate change. As extreme weather events grow more frequent, areas that once seemed like perfect, affordable places to settle are becoming less reliable, and sometimes, more dangerous.

I came across a thought-provoking article from First Street (firststreet.org) that delves into how climate change and rising insurance costs could fundamentally alter the landscape of real estate over the next 30 years. Here’s what stood out to me:

10 Key Takeaways from First Street’s Research

1. Climate Risk is Reshaping the Real Estate Market
   Climate change isn’t just about the weather—it’s altering the way we think about where to live. Rising insurance costs and changing buyer preferences influence population movements. These factors also affect property values. This creates a loop that’s transforming real estate across the country.
2. Rising Insurance Costs
   Insurance rates are rising much faster than mortgage payments. Between 2013 and 2022, insurance as a percentage of monthly mortgage payments more than doubled—from around 7-8% to over 20%. That’s a serious impact on homeowners’ budgets, and it’s only going to continue.
3. Disruptions in Sun Belt Growth
   For decades, Americans have flocked to the Sun Belt for its sunny weather and low cost of living. But those states, like Texas, Florida, and California, have absorbed the bulk of the country’s natural disaster costs. Climate change is shifting this trend, and people are becoming more cautious about buying property in these regions.
4. Understanding the Big Picture
   First Street’s Macroeconomic Implications Model (FS-MIM) paints a picture of how climate risks will reshape property values and economic growth. They’re factoring in both the skyrocketing insurance premiums and shifting migration patterns to predict what might happen to U.S. communities in the next three decades.
5. What Will Insurance Look Like in the Future?
   First Street estimates that by 2055, unrestricted insurance pricing will cause premiums to rise by 29.4%. That’s a combination of catching up for under pricing and climate-related risks. It’s worth noting that insurance premiums are already skyrocketing in some regions.
6. Insurance Costs Are Skyrocketing in Coastal Cities
   Miami, Jacksonville, Tampa, New Orleans, and Sacramento are seeing some of the most dramatic insurance premium hikes, with increases reaching up to 322% in Miami. This makes owning property in these areas more expensive than ever before.
7. Where Will People Move?
   Over 55 million Americans are predicted to relocate away from high-risk areas by 2055, including 5.2 million who will make the move as early as 2025. Climate migration is real, and it’s changing the way we think about home ownership.
8. Diverging Growth Across Neighborhoods
   The report divides neighborhoods into five groups:
   • Climate Abandonment (26%): Areas that will become less desirable.
   • Risky Growth (31%): Areas with some risk, but still growing.
   • Tipping Point (27%): Areas nearing climate-related challenges.
   • Economic Decline (11%): Areas that could face long-term economic struggles.
   • Climate Resilient (5%): Neighborhoods that are expected to thrive despite climate risks.
9. Economic Strength Isn’t Enough
   It turns out, economic strength alone won’t save an area from population decline. Some currently growing cities may reach “tipping points” where climate impacts outweigh the economic benefits.
10. The $1.47 Trillion Question
    By 2055, 84% of neighborhoods (or 70,026 census tracts) could see their property values drop due to climate risks. This could total up to $1.47 trillion in devaluation. That’s an alarming number, especially for homeowners and potential buyers.

My take, my answer to locals in the Puget Sound region is this, if you can, buy now, buy here. We are in a great market area with wonderful employers, big employers. Where climate change is surely impacting us, it’s not as stark as many areas. Sure, we have our years of drought and fire dangers due to all our gorgeous evergreen trees. But we also have water and rain. There is dampness & moss, hydroelectricity, and mountains that typically have good snow pack. We are a strong environment, not to mention stunning! If you wish to sell your property, I’ll find you amazing buyers who are hungry to engage in home ownership. My specialty is estates. I assist those looking to downsize. I help those dealing with estate matters. I handle all types of issues from selling the personal property assets to managing the estate process with the trustee. I’m your partner with over 38 years of experience.

Lisa Taylor, Owner & Founder of Rainier Estates (RainierEstates.com) & Top Producing Broker at Realogics Sotheby’s International Realty located in Bellevue, Seattle, Mercer Island, Kirkland, Madison Park & Bainbridge Island. Lisa.Taylor@RSIR.com