by DigitechHow Climate Change is Impacting Property Values What Homeowners and Investors Need to Know
While buying any property the foremost thing a potential buyer will think is about location. If the location is prone to natural disaster, investor will probably face low value of its property. People usually don’t prefer property near sea level as such areas face the maximum impact of climatic pattern. Being a homeowner you must understand climate change impact on property values.
This blog will talk about all the ways in which climatic change has an impact on the real estate market and the steps home owners and investors must take to move forward.
Climate change impact on property rates
Increased natural disaster risk
Natural disasters like flood, wildfires, and hurricanes are unpredictable. However, there are some natural disaster prone areas where the possibility of natural disaster is the most. Properties present in these areas will have low value, as most of the buyers will avoid such risky zones. If you have property in such areas, then you may find it difficult to sell it as no buyer will be ready to purchase it in such a disaster prone area.
For instance, properties near coastal areas will have lower rates because of the rise in seal level and the threat of hurricanes. Also, many insurance companies either refuse to insure such properties or take high premiums. This further dissuades potential buyers.
Shift in market demand
With the increase in awareness of climate change, buyers are looking for more resilient and sustainable properties. Preference is given to properties with energy-efficient features, designs that can tolerate environmental impact and sustainable materials. Properties that follow all these guidelines enjoy more demand and higher prices.
Conversely, properties that are not energy-efficient or are not made to deal with climatic conditions may see decline in values. Investors should look for the properties that are attractive for eco-conscious buyers. This will allow them to remain competitive in this dynamic market.
Regulatory changes and zoning laws
Governments at all levels have come up with new regulatory reforms to address the climatic conditions situations. As per that homeowners need to invest in flood defenses or energy-efficient upgrades. Any property which doesn’t comply with these laws may face low market value.
Also, areas which are not suitable for development because of risky climatic condition may experience halt in new construction. This will lead to imbalance in supply and demand and can impact the property values. You must remain updated about local zoning changes and new government regulations that can impact the property values.
The long term consequences of climate change
Decreased livability
With the increase in temperature and climatic condition some areas become less suitable to live. Areas that frequently face prolonged droughts, extreme heat and floods don’t enjoy much demand. For examples, properties in Southwest region usually face problems like water shortage and the houses present in these areas have fewer values, as buyers give preference to regions that are cooler and have reliable climate.
Also, the property value will also depend on the ability of an infrastructure to tolerate the weather condition. Communities that give importance to resilience like excellent drainage system, green spaces and renewable energy sources are likely to enjoy greater property values as compared to those that don’t give importance to such practices.
Impact of climatic change on insurance
Insurance plays a pivotal role while buying any property. With the increase in climatic risk, insurance company revises their coverage policies and usually increases their premium amount. Hence homeowners may face hefty amount of premium or some may need to remain uninsured altogether. Such condition will not only impact the homeowners but the buyers equally.
Investors must consider the insurance landscape in the risky area. High premium properties will be less attractive for the buyers and you may find it difficult to sale the property.
Strategies for homeowners and investors
Assessing location and risk
Location matters a lot in real estate investment, as climate differs at various locations. Both investors and homeowners do a thorough research of the climate at the desired location. Take help from resources like historical weather, wildfire risk assessments, flood maps to get valuable information and know the future risks.
It is a smart choice to invest in areas that have less risk of climate change. Areas with robust infrastructure and proactive climate policies can also be beneficial.
Emphasizing sustainability
You must invest in sustainable features to improve the property value. Look for options like solar panels, energy-efficient upgrades, modern insulation and energy-saving appliances to improve the value of your home.
Conclusion
As climate change has brought many changes in the real estate sector, both homeowners and investors must adapt to this change. They must embrace sustainability and assess risk to take informed decisions. Initially it might be challenging for both of them, but by adapting right strategies, they can easily navigate in this evolving landscape.
