Increasingly, insurers have joined those showing concern over the effects that climate change is having, and will have, on the real estate market. As climate change continues to worsen, severe weather will pose a great threat to many areas around the United States, particularly in coastal regions where storms are common, and arid regions where fires are a constant threat. Homebuyers will see the effects of this in increased insurance premiums as more homes come under threat from severe storms.
The Dangers of Climate Change
Climate change, also referred to as global warming, is the ongoing phenomenon of the Earth’s average temperature slowly rising over time. This rise in temperature is primarily attributed to the presence of increased “greenhouse gasses” in the atmosphere as a result of industrial activity, including carbon dioxide, methane, and nitrous oxide, among others. These unusual high temperatures have dramatically increased the likelihood of certain extreme weather events, as well as shifted climate patterns around the world.
Climate Change Considerations for Insurers
Insurers in particular are sounding the alarm for many coastal regions that are at increased risk of hurricanes and flooding. This has led many insurers offering homeowners insurance to adjust their policies to limit their liability in the event of major storm events, either increasing their prices or limiting the kinds of damage they will cover. In some cases, insurers have refused to write new policies for certain affected areas, seeing them as too high risk to cover.
The Impact of Climate Change on the Real Estate Market
Meanwhile, the real estate market has been increasingly forced to deal with the effects of climate change. Coastal areas, which were once prime real estate due to their beauty and ease of access to the ocean, are now considered dangerously high risk. The result is that it may be increasingly difficult for people in certain areas, including coastal regions like New York, Florida and California, to find buyers for their homes.
How It Might Impact Buyers and Developers
If you are looking to purchase a new home, particularly in a coastal area, you should make sure to consider the additional expenses and risks that come with it. As climate change continues to worsen, it will only become riskier to live in these areas over time. Developers, likewise, should take the potential effects of a warming planet on their own projects, lest they find themselves with a home no one wants to live in as a result of climate risk.
If you are an attorney assisting a client with a real estate transaction, you should contact the title insurers at Habitat Abstract. Our experienced staff will assist you with obtaining a title insurance policy that protects your clients and prevents unforeseen issues related to a defective title. Contact us at 1-888-99-TITLE (1-888-998-4853) or visit our contact page for more information.
