Wildfires in California have gone out of control this summer, and this can’t be ignored anymore, or taken as a one-off phenomenon: After all, it’s not a secret that many Californians wish to leave or have already left the state due to the deteriorating weather conditions, putting their lives in constant danger. With that in mind, the California case is only one example – global warming affects human behaviour in every corner of the globe. The real estate market is, obviously, also significantly affected by it – and that’s just the beginning.
“The real estate market is on the verge of major changes due to global warming and natural disasters. These changes are not likely to be avoided,” said Ofir Bar, a veteran investor with over two decades of experience in real estate. “What we can do, though, is make an effort to see the greater picture, try to foresee the future, and plan ahead towards it.”
No place is safe
As phenomena such as floods, hurricanes, wildfires, droughts, and colds happen more frequently and are becoming more and more destructive, a real estate market domino effect is inevitable. As already mentioned, it all starts with the forced migration of people from climate-hazardous zones to safer regions. This will cause real estate prices in endangered areas, both residential and commercial, to plummet. Lower taxes and freezing of loans are likely to happen as a result. Insurance companies will probably increase the rates of using their services, making the lives of those who choose to stay in hazardous areas financially tighter.
Coincident with that, real estate prices in the safer regions are expected to surge in an unprecedented manner. With that in mind, one should take into account that no place is absolutely safe from climate change. Even ‘safe’ regions must prepare for global warming to take its toll on them. Therefore, one can expect apartment insurance rates to surge even in these ‘safe areas’.
Prices of real estate in these regions are expected to surge not only due to the extreme rise in demand but also because of supply chain disruptions: Deforestation and droughts, for example, are holding forests back from thriving, keeping timber pricier and harder to acquire.
Some things can still be done
Even though not all places suffer from global warming in the same magnitude, they are all affected by it in some manner. For this reason, there’s no escaping from implementing sustainability in construction everywhere. This can be done both by using eco-friendly materials and by building ‘smart buildings’: structures using technology to reduce their energy consumption.
The point of no return has already been crossed, but that doesn’t mean global warming’s after-effects on mankind can’t be minimized. A behavioural mindset shift can be of help, but whether it’s going to happen or not depends mainly on legislators. “Sustainability and encouraging green construction should be prioritized,” Added Bar. “This can be done by offering tax credits or other incentives for contractors who’ll utilize environment-friendly construction methods.”
History proves that in too many cases, legislators tend to initiate drastic policy changes only when they feel their position is on the line. Hopefully, they will take matters into their hands before it’s too late.