Climate Change Has the Potential to Reshape U.S. Migration Patterns and Real Estate Values
Florida, North Carolina, and other areas recovering from the wrath of Hurricane Helene remind us that the risks from climate-related disasters have increased significantly over the last few decades. NOAA’s data on Billion Dollar Disasters shows exponential growth from just 3 events per year in 1980 to 25 per year in 2023. Floods, wildfires, droughts, tornadoes, and hurricanes are striking more frequently in areas where populations and infrastructure are concentrated.
A recent study by First Street Foundation suggests that as climate risks rise, population migration patterns will shift away from some areas, potentially creating Climate Abandonment Zones, and impacting real estate values. Early research shows that people are already factoring climate exposure into their home-buying decisions. For instance, research by Zillow shows that over 80% of homebuyers now consider climate risks. Other studies show that when provided with data on flood risk in particular, potential buyers actively avoid high-risk properties.
Regions like California, Florida, and Texas, which have seen explosive population growth over the past several decades, account for a significant portion of climate-related damages. For example, Texas has incurred over $40 billion in drought damages, and Florida leads the nation with $362 billion in tropical hurricane damage. Research suggests that the increased frequency and severity of weather events will further influence consumer's location choices.
Nonetheless people will continue moving to climate-vulnerable areas, attracted by economic opportunities and amenities. Evidence suggests though that this migration may become increasingly uneven between what are perceived as higher or lower risk zones. While the evidence is still emerging and complex, there is a clear trend of migration towards less climate-risky areas, particularly as people become more aware of the risks associated with climate change. This has the potential to reshape real estate markets by slowing property value growth in high-risk areas and boosting demand in safer zones.
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