Climate change risks are warping the housing market.

Home prices are 65% higher in places with high-risk air quality as climate change warps the housing market, Redfin report says.
The median sale price in a high-risk metro was $563,710 as of December, far above the $341,483 price in low-risk metros.
That has exacerbated the exodus of residents from areas on the West Coast as home prices sit near record highs.

Climate change is turning up the heat on the housing market.

Metro areas where air-quality risks are high are seeing median sale prices soar by 65%, according to a Redfin report published on Monday. That’s a median price of $563,710 in high-risk areas as of December — far above the $341,483 median sale price in low-risk metros.

A “high risk” metro is one where at least 10% of properties fall into the climate data organization First Street‘s labels of major, severe, or extreme categories of risk. Unsurprisingly, most of those high-risk areas are concentrated on the West Coast, an area that has recently been prone to disastrous wildfires. Other climate risks like ozone build-ups are also expected to cause poor, so-called orange+ air quality in places like Los Angeles County this year.

And while the climate risks alone are indeed a concern for residents, it’s more so the soaring home prices that are driving people out of those expensive markets, Redfin’s report stated. About 1 million more people moved out of metros with high risk from poor air quality in 2021-2022 than those who moved in, while low-risk metros saw roughly the same amount of residents funnel in versus out.

US West facing high home prices and out-migration as climate risks mount

“Deciding where to live is all about prioritization,” Redfin’s chief economist Daryl Fairweather said. “With housing costs hovering near their record high, the top priority for many homebuyers is getting a good deal.”

A Redfin survey last year showed that 9% of buyers cite climate change as a reason to move, while a fifth cited finding a better deal on a house.

The housing market has begun to loosen as mortgage rates tick lower, but home prices are still quite high. The median sale price on a home in the US was $417,700 as of the fourth quarter of 2023, per the FRED database. That’s up 27% since 2019.

“Even when homebuyers do consider climate change, poor air quality often isn’t top of mind because it’s not as visibly destructive as hazards like flooding and fires,” Fairweather said. “But as the dangers of climate change intensify, we will likely see more people factor air quality and other disaster risks into their decisions about where to settle down.”

Read the original article on Business Insider

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