Does and should climate change factor into home buying and investing?

[AJ Wong]

When it comes to successful real estate investment, insight and foresight are essential components to a profitable portfolio. 

Insight brought me from LA to the Oregon Coast in 2018, partly fueled by a recognition that the world is rapidly changing and there are some environments that would actually benefit from it. (Imagine how valuable our cottage on the coast become during the Pandemic just 3 years later? We left Los Angeles to hike, boat, fish and escape the madness and have not looked back..)

Speak with anyone that has lived on the Oregon Coast for a few decades, and they will tell you the harsh winters, used to be a lot harsher. 

They'll probably mention how the summers are longer, milder and generally year-round the OR Coast is more hospitable. 

In fact, in this recent Yahoo evaluation, Curry county on the southern coast was ranked the #1 county in the entire Pacific Northwest, to benefit from the effects of climate change. 

Considering the pace of change, and the duration of most mortgages, is climate change something that factors into your investment criteria for yourself or clients? 

Having lived and worked in Real Estate in both Florida & California, there are the considerations of fire and water. Florida has one of the most dysfunctional insurance markets in the country (if not the worst) primarily subsidized by a State program as an insurer of last resort. What happens in the next few decades if insurance companies stop (Like State Farm in both States) issuing coverage for oceanfront or waterfront properties due to rising sea levels, higher tides and flooding? They are already raising premiums in 'high risk areas' rapidly, just last week State Farm was approved to raise California policy rates an average of 20%. 

Have you been to South Florida lately? The only beaches that are there, we recently put there, with dredged or trucked in sand. At high tides, some condos are literally splashed with waves. There is not beach, where there was once tens if not hundreds of feet of pristine (natural) sand. In just my time there from 1988-2015, there is a visual change, that eventually will become apparent to banks and insurance companies underwriting the RE assets. In short, if it's not insurable, it's not financeable. 

There are other considerations as well. Let's say, an STR at a ski in ski out. Less snow? Less revenue. Strong wildfire season? Lower tourist activity. Even on the coast, there are some town with limited water access for new development. Can you believe that? Water shortages on the Oregon Coast! The list goes on...

Is a changing and in some cases challenging environment something that factors into your real estate investment decisions or those of your clients? 

Mine certainly are, flood, tsunami and fire concerns at top of mind, Zillow did a survey last year that showed 4/5 buyers factored or considered climate risks. 

Top things to consider: 

- Flood factor

- Connectivity (electrical & internet) 

- Water Source, backup and systems

- Waste & Sewage

- Insulation

- Elevation 

- Trees & Fire 

Please refrain from political discourse :)