The escalating impacts of climate change in our time not only affects the environment but also virtually every other aspect of our businesses. When climate change concerns first became news about 13 years ago, no one ever thought that its effects would roll on to the real estate industry. Today, real estate investors and homeowners must beware the adverse effects of climate change in the entire real estate sector. The following are just some of the ways of how climate change could impact the entire real estate industry.
Reduced Demand for Homes Fronting Water Bodies
One of the dire consequences of climate change is the increased prospects of rising oceans and other large water bodies. Before climate change was a concern, homes constructed at the front of water bodies such as oceans and seas were a major attraction to homeowners. The rising threat of flooding of such homes as a result of climate change is making such homes less attractive and risky to build let alone live in. Besides the prospect of rising oceans, the homes are highly prone to other climate-change-related weather conditions such as hurricanes.
Rising Home Insurance Premiums
Insurance companies focusing on securing and ensuring real estate properties have also buckled up for the adverse effects of climate change on their businesses. The companies now have to put up with compensating more homeowners as a result of the destruction of homes by hurricanes and floods. In response to this adverse business scenario, the companies have raised the home insurance premiums that homeowners have to pay.
Increased Property Taxes
Climate change is compelling homeowners to relocate from areas that are less prone to adverse weather conditions such as flooding and hurricanes. In response, the government is raising taxes for the few remaining homeowners in such areas to maintain normalcy in infrastructural developments and administration. Areas such as New Jersey where locals experience up to 240 tidal floods annually are expected to have higher property taxes.
Increased Property Values
Not everyone is going to be a loser as far as the effects of climate change are concerned. Some real estate investors and property developers are going to cash-in on the reduced demand for homes in certain areas and the consequent rise in demand in others. Homes constructed in areas that are not impacted by the effects of climate change are expected to experience high demands and thus high property value.