The real estate industry is a significant contributor to global emissions, and as a result is vulnerable to climate change impacts. With rising ocean temperatures fueling more frequent and severe storms, hurricanes, heat waves, droughts, and flood risks, property damage can be substantial. As a result, building practices and investment in climate-resilient architecture are becoming increasingly important to reduce carbon footprints, enhance insurability, and promote long-term asset value.
But the truth is that despite these risks, buyers are still flocking to homes and cities in regions most affected by climate change-related hazards. A recent analysis from real estate company Redfin shows that over the past three years, people have moved to floodplains, wildfire zones, and the areas most likely to be hit by hurricanes at a record rate. The same report also found that more than 629,000 more Americans moved into counties most susceptible to extreme heat compared to those that were most affected by flooding. For more info https://www.sellmyhousefastntx.com/we-buy-houses-fast-mckinney-tx/
Ultimately, this movement to flood-risk and fire-risk areas poses major challenges to the real estate market, with potentially large financial and social costs. High insurance premiums and overvaluation are some of the obvious concerns, but there are many others – like the risk of living in a state with water shortages or an urban heat island effect – that may make properties unattractive to future buyers.
And with climate-related disasters increasing in frequency and severity, these challenges are expected to only get worse. A recent report from the World Economic Forum showed that global climate change-related disasters have already cost around $2.8 trillion, with most of this total coming from loss of life and property. So, if this trend continues, it is not unreasonable to expect that real estate market climate change resilience will be an increasingly key topic of conversation in the industry in the years ahead.
Real estate stakeholders need to better understand how climate change risks will affect their assets, which requires a deeper understanding of both transition and physical climate risks. However, turning complex climate models into actionable business insights can be difficult — particularly given that predictions are often uncertain and highly variable. Consequently, real estate owners often struggle to develop effective adaptation strategies.
Fortunately, there are some initiatives in place that provide frameworks to help real estate assets assess and manage climate risk. However, these efforts need to be strengthened to ensure that the real estate industry is prepared for a changing climate. By using Deepki Ready to understand exposure and vulnerability, real estate stakeholders can better prepare for climate change threats and ensure the sustainability of their investments. Check out our blog on Deepki’s new Climate Resilience feature to learn more about how this technology can help assess and disclose risk to investors.