What Impact Will Climate Change Have on Property Values?
Climate change has been an issue that many experts have been warning the world about for many decades. Over the years, there have been numerous efforts and campaigns to address climate change and help battle its worsening effects.
Climate change requires climate action for a better global climate system.
Unfortunately, it seems like it is now a reality that we are experiencing each day. There have been dramatic weather events all over the globe that are attributed to climate change in recent decades and is now posing a huge threat to everyone’s lives.
While climate change can lead to the total destruction of life as we know it, there are many industries that are heavily affected by this concern as early as now. One of these is the housing market or the real estate business in general. Because of the calamities happening across the globe, many homeowners are worrying about the safety of their property’s location and the effects of climate change concerns to the value of their real estate.
Getting started to be informed about climate change and its effect to real estate? In this article, the different effects of climate change and how it affects the property values in real estate.
Changes Caused by Climate Change
Climate change refers to the disruption of long-term weather patterns which is bad to the usual balance of nature in our planet. The culprits behind this are human activities that produce heat trapping gases such as burning fossil fuels that contribute to global greenhouse gas emissions. Needless to say, climate change is posing new challenges for survival to all life forms on Earth.
There have been obvious changes caused by climate change that are becoming more frequent in recent years. The following are some of these effects that happens somewhere in the world each day.
Floods is a major concern in the housing market
In the Philippines, storms and typhoons are expected each year. In fact, Time Magazine named the Philippines as the “most exposed storm-exposed country in the world” in 2013. News of this kind are nothing new to Filipinos.
However, there have been severe storms and typhoons in the Philippines that cost the loss of many lives and properties like the Typhoon Ondoy in 2009. It was surely a traumatic experience for many Filipinos who lived in the flood-stricken areas during that time such as Marikina and Pasig City. This event urged many people to relocate in case another calamity like this happens especially with climate change constantly affecting the weather conditions all over the world.
Flood risk is one of the top concerns of homebuyers. Making sure that their family and their property are safe is a dealbreaker for many clients who are looking for a new home, especially if the location of the property has a history of being a flood-risk area.
Many countries are affected by heat waves
Being a tropical country, heat has always been a concern in the Philippines. However, it was observed that there have been a constant warmer temperature in the country and a spike of extreme heat during the typical hot days.
Not just in the Philippines, but heat waves are actually becoming more frequent across the globe, more so in urban areas with less green spaces and bigger population. The World Health Organization (WHO) has been warning people about human health dangers of being exposed in extreme heat during the summer such as heat stroke that is known to be fatal.
In real estate, heat waves are affecting homeowners and real estate developers who are selling their properties in heat risk locations. This is disadvantageous as it can drive their property’s value down as homebuyers are becoming more concerned about the dangers of heat risk.
Drought is caused by prolonged dry season and higher global temperatures
If people were asked what is one thing that they cannot live without for an extended period of time, the item that would probably top the list would be water. However, due to global warming, there is now constant news about water shortage happening these days all over the world. There is also a warmer global average surface temperature caused by greenhouse gases.
Aside from the obvious issues that will arise from water shortage, another concern that the housing market faces because of drought is foundation damage of properties. Because of drought, the dry soil shrinks and eventually creates gaps beneath the foundation of properties. This will lead to cracks and further issues moving forward such as structural damage which can be very dangerous to the homeowners.
Wildfires are common in countries with dry climates and hot weather. However, due to the increased global temperature, the occurrences are becoming more frequent and more severe than before.
Since wildfires is a devastating threat to real estate properties located in high risk locations, it is a concern for the housing market in the area as homebuyers are cautious of purchasing a property where there are even a slightest risk of being in a wildfire.
Effects of Climate Change on Property Values
As the world do nothing significant about carbon emissions, a potent greenhouse gas, climate change will continue to worsen all over the world, developed or developing countries alike. This will greatly impact the real estate business in the years to come.
Here are some of the expected changes to be observed soon:
Property Values Drop in High Risk Areas
As the weather events become worse and more unpredictable in the future, many properties in high risk areas are expected to decline in value. This will cause many homeowners to lose equity and worse, end up selling their homes for a lesser price.
Property Values Increase in Low Risk Areas
On the other hand, a good news for other home owners is that homebuyers will flock in areas with low risk for possible climate change events such as flooding, heat waves, or lack of water supply.
For homeowners who are putting their properties up for rent, this is also good news as more renters will come to the area to look for housing options than identified high risk areas. With more demand, lessors can increase the monthly rent rates which is obviously good for business.
Higher Probability of Home Damages
Just like how extreme weather conditions are dangerous to one’s health, it can also increase instances of home damages. Of course, this will cost the homeowner to spend more for maintenance and repairs than usual.
Worst case scenario is to have the structural damage to the property because of the exposure to extreme weather changes.
Higher Insurance Fees
One of the requirements in purchasing a property is home insurance. It is a good investment to prepare for unprecedented events that may happen to the property. However, due to the unusual frequency of calamities happening all over the world, insurance rates have increased a lot. In the future, it may come to a point that the regular premiums might be burdensome to homeowners.
Higher Taxes and Other Housing Fees
As the government sets aside budget to address calamities in the country caused by climate change, there will definitely be an increase in the required taxes to the people. This will affect homeowners as there are property taxes that needed to be settled regularly.
Be Safe with Brittany Homes!
The world still has a long way to go to reduce emissions and battle climate change. It is best to prepare and choose a home that can keep the family safe amidst the ever-changing weather conditions.