What must homeowners know about climate change to reduce risks and increase their return on investment?

Climate change

Though many aspects of climate change are beyond your control, being informed can help you navigate the impact of climate change on you. The first step is to be aware of how climate change can affect your largest investment, your home, and how it might affect it in the future. The second step is to be aware of your options. In this article, we break down what you need to know, how to get the information you need, and advice for different homeowner scenarios as it relates to climate change.

Determining risk

Whether you are buying or staying put in a home you own, the first step to knowing your options is to figure out your risks. The two biggest threats to homeowners are rising water (both rivers and ocean) and rising temperatures. Rising waters in rivers is caused by storms being more destructive, producing large amounts of rainfall in a short amount of time, and the oceans rising is caused by the melting of ice due to rising temperatures. It is estimated that 400,000 more homes will be at risk of flooding in the next 20 years. Beyond flood risk, rising temperatures are also to blame for the increase in wildfires that threaten properties.

The first step for a homeowner near a waterway is to enter your address, or the address of a home you are considering purchasing, into the newly revised FEMA flood map site and assess your area’s risk.

Also, become accustomed to your area’s projected temperature increases over the next few years. This tool from the NY Times helps you figure out how many days over 90 degrees you may see in the future, which has implications for energy needs and also fire risk.

Now, as with folks during Houston’s Hurricane Harvey, many people who aren’t even in a flood zone can flood. In extreme weather events, reservoirs can fail, or rivers can rise that were never expected to. You may not be able to assess all risks, but you can take stock of your particular surroundings, your particular topography and apply news from other areas to your circumstances when predicting risk to gain a better understanding.

Property values

There is new data on the effects of property values in areas with flooding risk from rising tides. A study from the University of Colorado and the University of Pennsylvania showed that homes that are exposed to a rise in sea level sell for 7% less than those that don’t. A study by Zillow projected that 1.9 million homes in the US will be underwater if sea levels rise six feet, which is a higher-end projection for 2100.

There have been reports of real estate developers hedging their bets by buying up higher land near waterfronts, expecting this area to sell at a premium as tides rise. Given how climate change can affect property values, it’s a good idea to regularly monitor home value changes in your area.

Energy efficiency

Warmer weather means higher costs for cooling. Global warming is projected to raise temperatures another 1.8 to 10.8 degrees by 2100. That means more individual costs for homeowners and larger aggregate loads on city power grids. This is probably why studies are showing that solar has become a feature that increases the value of a home. In addition to the energy savings, solar is seen as a desirable feature from a green perspective.

If you are considering energy efficient upgrades, these will likely continue to produce a higher ROI than other types of home improvements, as costs climb due to warmer temperatures.


Increased risks of damage from storms, fire and flooding all point to the need to keep up to date on your insurance needs. But how? It can seem overwhelming.

The first step is to find out what is in your policy. That means, finding your declaration page, the page of your insurance that details what exactly you have coverage for and for how much (read our guide to find out exactly how to get it if you are having trouble finding it, or just call your insurance company and have them send a copy over).

The second step is to figure out your options for extra insurance. Many standard policies do not cover flooding for example, and in hurricane or storm-prone areas, wind insurance requires a separate policy. Federal flood insurance is available if you qualify. For a complete rundown of extra insurance related to storms, see this article. Most homeowner polices do cover fire insurance.

The other thing you want to check is whether your insurance policy covers 100% replacement cost of your home. Some insurance only covers 80% because that is what banks require you to carry, so that they can recoup their mortgage cost. In the case of a fire or total loss, such as major flooding that requires a new structure, you’ll want to have 100% coverage.

Here’s a free guide from us on how to discover your current coverage, revise and negotiate your homeowner insurance policy for the lowest price.

Emotional toll

Waterfront property is gorgeous. There’s a reason why so many people flock to the sea and the riverfront and sink hundreds of thousands of dollars into property that is at risk of flooding – waterfront is wonderful to be around. Soak in the salt air and feel the breezes! But, for many, what seems like a chance worth taking can become the opposite of rest and relaxation when confronted with real financial risk and worry from environmental threats. For many, it’s a better option to rent something seasonally so that you can enjoy the waterfront without bearing the risk of losing all of your possessions and investment.

Risks from climate change aren’t for the faint of heart. Similarly, rising temperatures may make some climates tedious or even life threatening with certain health problems, such as from west coast forest fire smoke, or extreme heat conditions.

What should you consider when buying a home?

Look at flood maps and temperature projections for the area you are considering buying in. Make sure that you take into account proper home insurance costs you will need to protect your investment, given your risks, when considering if a home is affordable. You want to make sure that you have proper insurance for the current realities, and accurately consider the effects of climate change on your property’s future value, when considering a home as an investment.

Look at historical flooding in the area you are buying in. Determine the likelihood of the home having flooded in the past, which can cause unseen structural damage. In most areas, sellers are not required to disclose whether a home has flooded in the past or not. Make sure that you have a very thorough inspection and if you suspect flooding, pay for an extra foundation inspection by an expert.

What should you consider if staying put?

Consider your long term energy needs, given projected temperatures in your area. Here’s a guide on how to smartly go about energy upgrades without making a mistake. Take stock of and regularly evaluate and readjust your insurance. See above for a comprehensive guide on how to do this. Become familiar with changing flood and weather risks so that you aren’t caught off guard. Think about and monitor home values in your area and consider whether the location of your home and the changing climate will make your home worth more or less in the future.

What should you consider if selling?

Think carefully about the timing of your sale – if you are in a flood zone you might want to sell before your property floods or waters rise more, which will decrease your property value. Consider the value of installing energy efficient appliances. Get a beat on the values in your area and particularly your block so you can be best positioned to get top dollar. If you don’t know how to figure out your home’s value on your own, here’s a free guide on how to do it.