Climate Change and How it Affect Real Estate

Recent weather in the Hudson County, NJ area brings the question of how climate change is affecting the world around us.  From this past winter with the many inches of snow to the recent flooding of homes in the area, we’re noticing how our world is changing. Here are some key changes to expect.

Higher insurance premiums

As a buyer, one of the first questions for your realtor is whether the home you are buying is in a flood zone. This affects the insurance needed for the property. Insurance has historically been the main tool for mitigating the risks posed by extreme weather events. With extreme weather we all have been facing, insurance costs have jumped. In the coming years, coverage may be more limited in high-risk areas, and insurance may ultimately become too expensive or even unavailable for some.

Decreased value of homes in at-risk areas

I know we have been all hearing how crazy the market has been with home values increasing and homes selling quickly.  If extreme weather events continue or increase in the future, more areas of the may become undesirable for future homebuyers. This would inevitably cause property values in these areas to decline. Homeowners in those areas could face a situation where they see the value of their homes decrease. It is also possible that more people will decide to rent vs. own, rather than risk declining property values.

Homeowners may also price their homes for sale in expectations of future climate risks. This means property values may be influenced not just by current hazard levels, but also by expectations of how hazards could evolve.

Increased value of homes in low-risk areas

On the flip-side, low-risk areas, may see an influx of competition as they will be more desirable. Homebuyers, and even renters, will slowly move away from high-risk areas. If this happens, we should expect demand to increase in these low-risk areas, buyers may see tougher bidding wars and ultimately more expensive homes.

Higher property taxes and housing costs

Municipalities will need to strengthen communities because climate change. Of course that some of that cost will be passed to homeowners and will likely need to be funded through an increase in property taxes and fees. Also as folks leave high-risk areas, the tax base in those communities will shrink, possibly requiring tax increases for those that remain.

What can homeowners do to protect their property values and homes?

While homeowners can’t completely shield their properties from the effects of climate change, there are many preventative measures they can take. Here are some ways homeowners can protect their homes and start planning ahead:

Understand your risk 

The first step you can take to protect your home and its value is to identify your exposure to risk. Research you’re your home’s areas or where you plan to purchase a property. There are online resources where you can find climate risk data.  

Update your Home for risks in your area

Making renovations to improve your home’s risk can reduce the chance and severity of major damage. In fact, many homeowners are already investing in specific updates to protect their homes. I personally installed a water-proofing system in my property in Union City, NJ.  A recent survey showed that homeowners have invested $5,000 or more to make their homes more resilient to at least one climate-related risk.

Connect with insurance providers

If you are in the market for a property, you want to learn what types of home insurance you will need. Not every insurance policy covers every all risks, so do your due diligence by talking to insurers to ensure your home will have the proper coverage. If you’re already a homeowner, it’s important that you check your policy and confirm with your insurer that you have adequate coverage. You may never need specific climate risk insurance coverage, but it will give you peace of mind when major events happen like what we have seen in the past week.

Monitor property value

As a homeowner, I am always monitoring my property value. There are a few ways to do this. First, you can call me and I can provide comprehensive report whenever you would like one. Secondly, you can also receive an instant home evaluation here from my resources HERE. By typing in your address, you’ll see a estimate for your home based on recent sales in your neighborhood. You can also monitor your property value by researching the value of other nearby properties.

Work with Your Community  

Homeowners and local community members can also play an important role in fighting climate change and protecting the area in which they live. Community members can also show up at local meetings at city hall and advocate for investment in climate-resilient infrastructure when developments are being made in the community.

Unfortunately, the risk of climate change isn’t going anywhere. Although climate risks have yet to have major negative impacts on property values, we have seen extreme weather events increase, which will likely affect values eventually. 


This is not health, legal, financial, or tax advice. This article is for informational purposes only and is not a substitute for professional advice from a medical provider, licensed attorney, financial advisor, or tax professional.