Will climate change make your house worthless?

Research shows sea level rise is already affecting home sales.



Myles Ma

Myles Ma

Senior Reporter

Myles Ma is a senior reporter at Policygenius, where he covers personal finance and insurance and writes the Easy Money newsletter. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

Published May 4, 2021 | 4 min read

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Climate change may already be affecting your biggest investment. Rising sea levels are driving home prices down, a study by researchers at the Wharton School of the University of Pennsylvania finds. 

Philip Mulder, a doctoral candidate at Wharton, and Benjamin Keys, a professor of real estate at the school, looked at home sales in coastal Florida from 2013 through 2020. They compared real estate markets that are threatened by sea level rise to markets that are not as threatened by sea level rise. They found drops in prices and the number of home sales in threatened areas, as buyers became more pessimistic about climate change.

Relative sales volumes in at-risk areas fell as much as 20% from 2013 to 2018. Prices stayed steady over that period, but fell by about 5% relative to less-exposed areas from 2018 to 2020.

Mulder says divided views on climate change might be why prices were slow to fall. While people who are worried about climate change might pay less for a house on the coast or avoid buying it altogether, climate change skeptics will still be happy to buy.

"There's still a market and the people in this market are entirely optimistic about what's going to happen to the housing market in those areas," Mulder said.

A home is likely the most expensive thing you'll ever buy. If you're worried about how climate change will affect the value of your home or the home you want to buy, here's what to do.

Is your home at risk?

Whether you own a home or are looking to buy one, you should first learn about its flood risk. Government data is a good place to start. The National Oceanic and Atmospheric Administration's Sea Level Rise Viewer can show you how water levels up to 10 feet above present day will impact your home. 

Mulder also pointed to a newer tool called Flood Factor. Flood Factor was created by First Street Foundation, a nonprofit that researches flood risk. In addition to risk from sea level rise, it also models flooding from tides, storm surges, rivers and rainfall. Realtor.com and Redfin.com have integrated Flood Factor data into their real estate listings.

"It's where I found out my rental unit, which is near the Schuylkill River (in Philadelphia), is at some risk of basement flooding," Mulder said.

Flood Factor's bases its models on measurements from tides and streams across the country combined with global climate models, said Jeremy Porter, head of research and development at First Street Foundation. The data show that more than 16 million properties have flood risk, including many far from the coast.

What to do with the data

So what if your home or the home you want to buy is a flood risk? There are ways of protecting your property, but they range in cost. Simply cleaning your gutters can mitigate flooding by directing water away from your home. In many areas, homeowners have elected to elevate their homes, but that can cost as much as the home itself, Porter said.

A standard mortgage lasts 30 years, so consider the long-term costs and benefits, Mulder said.

"Think about the investments you have to make and the time horizon over which this house might continue to be a solid investment," he said.

If that cost doesn't outweigh the value of living there, it might be time to cut your losses and move, he said. Some areas offer buyouts to people in flood-prone areas. 

Monique Coleman bought her home in Woodbridge, New Jersey, in 2004 without realizing it flooded frequently. After years of watching her home's value drop and the cost of insuring it against flood damage rise, she and other members of the community lobbied her local government to take part in the state's Blue Acres program, which offered buyouts to Coleman and many of her neighbors.

She ended up selling her home to the state for $287,000, less than the $305,000 she had bought it for. 

"If we didn't take the buyout and I tried to sell the home, then I would have just been replicating the cycle of repetitive flood loss and damage," Coleman said. "I just didn't want anyone else to be in that situation."

Flood insurance

One way to protect yourself from the financial damage of flooding is insurance. A standard homeowners insurance policy won't cover flood damage, so you'll need a separate policy. 

While there are some private providers, the main provider of flood insurance is the U.S. government. And it's often a good deal because it's heavily subsidized, Porter said, though updates to the National Flood Insurance Program coming in October will make it more expensive. 

If your home is in a federally recognized flood zone you may be required to buy NFIP coverage, but it's worth considering even if you're not, since the federal flood maps may be out of date, Porter said.

One thing's for sure: When it comes to flood risk, the time to act is now. Climate change isn't going away.

"We can already quantify the effects on the housing market," he said. "We can already quantify the effects on the water levels that we're measuring. It's definitely something that is happening and it's something you should take into account when you're projecting out 30 years."

Image: Bauhaus1000 / Getty