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Our climate is changing increasingly rapidly, and homeowners and business owners must anticipate the effects this will have on their bottom line. This anticipation is especially important for those living and operating businesses in coastal areas, as these are the regions of the country most likely to be affected by climate change in the upcoming decades.

Decreasing ValuesPhoto: bigthink.com

As sea levels rise and extreme weather phenomena become more common, real estate in flood-prone areas is likely to decrease in value. In some areas this decrease is already evident, as discussed in this article from Forbes. Increased risk of flooding leads buyers to be wary of purchasing homes near the coast, leading to a clear demand issue. Flooding can increase insurance premiums, cause costly damages, and may require extensive renovations to avoid flooding in the future.


These issues may dissuade buyers from purchasing, even if the cost is competitive. As sea levels continue to rise, flood areas will grow and include more and more properties, which will increase the demand for real estate inland. This will, in turn, increase the cost of such properties, and may shift business models from brick and mortar business models towards B2B ecommerce models.

Extreme Weather

Extreme weather is another risk for real estate on the east coast. Hurricanes already batter this area each year, but climate change has increased the frequency and intensity of these super storms. Hurricanes can cause extensive damage to siding, roofing, windows and doors, and other components of a building that are expensive to replace. Northeastern states may not experience hurricanes as frequently, but winter storms have their own set of risks for property owners, including roof damage from heavy snow loads, access issues, electrical outages, and more. Buyers looking to avoid these types of property damage are likely to turn their eye to states with milder climates and fewer coasts.


Flood insurance is a lesser-known factor in the climate change debate. Insurance companies must base their premiums on actual risk, and as floodplains grow in the East premiums rise. This type of insurance is not usually included in homeowners or business policies, making it an expensive add-on that may increase in cost as sea levels rise and the risk of flooding increases each year. An unprepared buyer may forgo flood insurance altogether, requiring expensive repairs to be paid out of pocket.


Another factor to consider would be mold. Coastal areas are generally humid and provide an excellent environment for mold to grow, and flooded homes are particularly prone. Real estate purchased in areas that may have been arid prior to sea level rises may have hidden costs living in the walls. Mold remediation is necessary to avoid illness, breathing issues, and other health problems but is expensive and time-consuming. Buyers may factor this in when looking at properties that are in an area with high humidity, especially if the area was historically drier. These properties may not have been built with mold in mind and may be built with materials that are not resistant to mold growth.


It is worth noting that some real estate may have been built in a way that is cognizant of impending climate change. These properties may have materials, designs, or landscaping features that seek to solve or mitigate risks associated with the results of climate change, such as homes build on piers in flood zones or fire retardant materials in areas prone to intense wildfires. Property values for these types of homes may not follow decreasing trends as they represent a safer investment for buyers in these areas. Builders may find opportunities in vacant properties for this reason.

Overall, climate change is already beginning to affect Eastern real estate values. Buyers should be aware of issues unique to their environmental challenges, and keep an eye on the hidden costs of purchasing a home or operating a business in areas where climate change is likely to hit hardest.


Dawn Castell is a budding entrepreneur. After graduating with her MBA, she spent a few years working in the CPG industry and a few more working in the business tech industry before she set off to start her own business. She has been consulting with businesses, large and small, on the side ever since.

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Photo: bigthink.com