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July 24, 2019
As climate change makes extreme weather events increasingly frequent and severe, the U.S. housing market is taking a hit.
The 2019 Harvard Joint Center for Housing Studies (JCHS) report looks at climate change as an urgent threat to housing. According to the report, natural disasters cost the United States $92 billion in damage in 2018, including 14 weather events that each reached the $1 billion mark (three events, Hurricane Michael, western wildfires, and Hurricane Florence, each surpassed $24 billion in damage). Such events used to be rare – in the 1980s, fewer than three billion-dollar disasters hit the United States each year, totaling $17 billion in annual damage.
Storm after storm, homeowners and businesses pour money into repairing their property, only to be devastated in the next disaster. JCHS reports that “flooding and wind from Hurricane Florence alone damaged some 700,000 residential and commercial properties in North Carolina, South Carolina, and Virginia. In California, last year’s wildfires destroyed over 18,800 structures in Paradise and another 1,600 in Malibu.” These extreme weather events are crippling the nation’s housing stock, and only becoming more frequent.
Currently, most homeowners remedy the damage by repairing, rebuilding, and insuring, although most home insurance policies do not cover flood damage and many homeowners do not purchase separate coverage. Even with repairs and insurance, many vulnerable properties will lose value as climate change advances. These risks are highlighted in the recent report, Climate Risk and Real Estate Investment Decision-Making, published by the Urban Land Institute (ULI) and Heitman, a real estate investment management firm. Although many homes are insured for direct weather damage, the ULI-Heitman report suggests this is not a sustainable solution to climate impacts: “[insurance] will not cover loss in value from a reduction in the asset’s liquidity.” As extreme weather worsens, property owners might be unable to recover the value of their assets.
Climate change does not harm all homeowners equally. Many homeowners on low or fixed incomes are unable to afford the steep costs of insurance and repairs after a natural disaster. With 40 percent of Americans unable to afford an unexpected expense of $400, climate change brings many homeowners one weather event closer to financial disaster.
Not only does climate change harm homeowners, but it endangers those with no steady housing. Without access to shelter, homeless people are especially vulnerable to extreme weather. JCHS reports that the unsheltered population is growing, especially in Western states where housing is very expensive. California, Washington, Colorado, and Oregon all experienced “sharp increases in their unsheltered homeless populations” over the last few years, leaving more people exposed and unprotected from natural disasters. With fewer resources, these people will have more difficulty seeking shelter or evacuating in preparation for extreme weather.
Homeless people are vulnerable to deadly temperatures on both ends of the spectrum. In extreme cold, they live at the mercy of people who donate blankets, coats, and shelter (during Chicago’s deep-freeze last winter, one woman donated hotel rooms for homeless people). In heat waves, anyone without access to air conditioning is vulnerable. Homeless people experience long hours of direct sun exposure, with no relief from air conditioning. The Union of Concerned Scientists references the unequal distribution of climate harm in their new report on Killer Heat in the United States. Killer heat disproportionally harms people who are “not white, have low or fixed incomes, are homeless, and those in other historically disenfranchised groups.” These extreme heat spells will only become more frequent and severe as climate change worsens.
Both the JCHS and ULI-Heitman reports echo the urgency for long-term action to prepare the housing market for climate impacts. JCHS suggests this plan should “[revolutionize] the design, construction, and financing of housing” to make homes more resilient to the impacts of natural disasters.
This transition should also ensure that affordable housing is available and that energy efficiency upgrades are attainable for lower income households. EESI has already taken initiative in this area, helping households upgrade their energy efficiency and install renewable energy systems by financing the upgrades on their electricity bills.
Many leaders and organizations are already pushing resilience as a priority in housing policy. The Disaster Recovery Reform Act of 2018 allows the Federal Emergency Management Agency (FEMA) to shift more investment into pre-disaster mitigation and allows communities to use post-disaster assistance to build back better. These policies will make communities more resilient when disaster strikes. Many organizations are making local and regional efforts to prepare homeowners for climate impacts. Habitat for Humanity is spearheading one such effort to help households prepare for extreme weather events.
Still, the housing market will experience extreme disruptions as climate change advances – more property will be lost and more people will be displaced. To stabilize our nation’s housing, we must reduce emissions to prevent further climate change, and help communities become resilient to the impacts of extreme weather.
Author: Katie Schneer
Top-Rated Climate Nonprofit – 4-Star Charity