How Climate Change Concerns Influence Real Estate Decisions: A Data-Driven Analysis

A recent survey of homebuyers and sellers reveals that nearly three-quarters (73%) of respondents consider the increasing frequency or intensity of natural disasters when making real estate decisions. However, this concern has not yet significantly altered market behavior, as more immediate factors like affordability and job opportunities often take precedence. The level of concern varies dramatically by geographic location, age, race, and income, highlighting a complex relationship between climate risk and housing choices.

How Does Geographic Location Affect Climate Change Concerns in Real Estate?

Geographic location is a primary determinant of climate change anxiety among homeowners. According to a 2019 survey, residents of Houston, Texas, were the most concerned, with almost 60% stating that natural disasters "very much" factor into their decisions. This is directly linked to the area's experience with catastrophic events like Hurricane Harvey, a significant 500-year flood event. Following Houston were New York City (47%) and Miami (46%), both coastal cities facing distinct climate threats. In contrast, only 23% of respondents in the Midwest reported that natural disasters seriously impact their decisions, the lowest of any U.S. region. This disparity underscores how direct exposure to climate events shapes perception.

Are Concerns About Climate Change and Real Estate Linked to Demographics?

Climate change concerns are not uniform across demographic groups. The data shows they are most pronounced among younger and minority homebuyers and sellers.

• By Race: Nearly half of all Black respondents indicated that natural disasters "very much" factor into their real estate decisions, the largest share of any racial group. This compares to 32% of white respondents. This heightened concern is supported by research, including a 2018 report that found census tracts with primarily Black, Hispanic, or Native American populations were 50% more vulnerable to wildfires. Historical housing patterns have also often placed minority communities in low-lying areas at greater risk of flooding.
• By Age: Respondents under 25 were the most likely age group (42%) to be "very concerned" about natural disasters. Conversely, those aged 65 and older were the most likely (16%) to be "not at all concerned." Based on our experience assessment, this likely reflects the longer time horizon younger people have, meaning they expect to own their homes when the impacts of climate change become more severe.

How Does Income Level Influence Perceptions of Climate Risk?

Affordability creates a paradoxical relationship between income and climate risk. The survey found that participants earning over $200,000 per year were the most likely (42%) to be "very concerned" about climate change. Conversely, those earning less than $100,000 were the most likely to be unconcerned. This dynamic highlights two different risk exposures: affluent buyers may be considering high-risk, high-cost properties like beachfront homes, while buyers with more modest incomes may be forced to prioritize immediate housing costs over longer-term, less certain environmental risks.

Has Concern for Natural disasters Actually Changed Real Estate Market Values?

Despite high levels of concern, the survey data and market analysis suggest that climate change has not yet caused a widespread decrease in home values in high-risk areas. As noted by a chief economist, environmental concerns are often "outweighed by other factors that feel more immediate, like affordability and access to jobs." Houston, for example, continues to see population growth and rising home prices driven by its strong job market. This indicates that for most buyers, current economic pressures are more influential than potential future climate risks when making a final purchase decision.

Key advice for buyers and sellers in today's market:

• For Buyers: Prioritize researching a property's specific climate risks, such as its FEMA flood zone designation, over general regional concerns.
• For Sellers: Be prepared to answer questions about a home's resilience features, such as updated drainage, elevation, or storm-proofing, as these are becoming more relevant to a growing segment of the market.
• For All: While climate change is a significant consideration, your final decision will likely balance this risk against personal and financial priorities like budget, commute, and family needs.