Consider climate risks when buying a home, experts warn

Climate risk is one of the most significant—yet most overlooked—considerations in buying a house today, experts warn.

According to a recent Redfin report, the likelihood of droughts, heatwaves, flooding, and wildfires can dramatically affect the cost of a policy and, in some cases, render a property uninsurable.

Some insurers have even withdrawn their products from areas most susceptible to natural disasters, with State Farm no longer offering insurance in California.

But despite all of this, figures from Redfin suggest high-risk regions are continuing to see healthy demand from buyers, primarily because of lower asking prices.

And while the properties themselves might be more affordable, insurance premiums are surging—with the typical cost of a policy in Florida rising by 35% in a single year.

Redfin chief economist Daryl Fairweather said buyers need to be aware of the "major financial implications" they face when moving into a climate-risky area.

She recommends performing detailed research on insurance costs and shopping around because the cost of a policy can vary wildly.

"Homeowners should also be ready for their premiums to increase in the future, knowing that it may be difficult to predict by how much. That uncertainty makes the cost of homeownership riskier," Fairweather added.

There's also a risk that the value of a home can plummet if it regularly suffers from flood damage, meaning there needs to be careful thought on the cost of maintenance, too.

"Look into how much it costs to repair a roof damaged by wind, hail or fire. It's always better to budget for these costs and prepare instead of waiting for a disaster to hit and then dealing with the aftermath," she said.

Changing threats

According to First Street, a data company assessing climate risks, rising temperatures in the years to come are going to be "increasingly problematic."

The firm says that repeated heatwaves are already driving families out of certain areas and affecting local property markets.

"It is already the most dangerous of all climate exposures from a mortality perspective, as more people are killed by heat exposure than wildfires, floods and hurricane winds," First Street researcher Jeremy Porter warned.

He thinks "every region of the country has climate risk"—and some of them, California and Florida included, are now changing building codes in response.

While the number of fatalities following severe weather events has been declining in recent decades, the economic losses associated with them are rising.

For instance, Hurricane Harvey in 2017 stands as the most expensive tropical cyclone on record, causing $125 billion in damages.

Fast forward to now, estimates from AccuWeather indicate that Hurricane Beryl could bring losses of up to $32 billion, with insurers on the hook for $2.7 billion.

In Texas, an estimated 1.7 million people were without power for several days, losing access to air conditioning as temperatures surged.