A Phil Hall Op-Ed: Do you recall the children’s tale of Chicken Little, where a barnyard bird who is hit on the head with an acorn that dropped from a tree limb? Chicken Little took the bonk to its noggin as evidence that the sky was falling and began to run around spreading this ridiculous story, whipping up hysteria among the other barnyard critters who become victimized by an unscrupulous fox that promised them aid but later ate them.
I was reminded about Chicken Little thanks to a new study published yesterday by First Street Foundation, a group that promotes itself as the entity that can “make the connection between climate change and financial risk at scale for financial institutions, companies and governments.” Their study was titled “Property Prices in Peril” and one aspect of this report was seized upon by both mainstream and real estate trade media. According to First Street Foundation: “By 2055, 70,026 neighborhoods (84% of all census tracts) may experience some form of negative property value impacts from climate risk, totaling $1.47 trillion in net property value losses due to insurance pressures and shifting consumer demand.”
Of course, the notion that someone can predict both the weather and the housing market for 30 years from today is astonishing. The study makes the double mistake of assuming that today’s approach to climate-related challenges will be in place three decades from now while also ignoring that some of today’s most extreme weather-related catastrophes – most notably the California wildfires – could have been minimized or even prevented if proper protections were already in place.
The First Street Foundation study doesn’t seem to understand what’s happening in today’s housing markets. The study stated: “Historical population migration to the Sun Belt, which has dominated US population movement for decades, is being fundamentally disrupted by climate change impacts. The three largest Sun Belt states (Texas, Florida, and California) have absorbed over 40% of the nation’s $2.8 trillion in natural disaster costs since 1980.”
That statement makes little sense when you consider that waves of people have been leaving California because of different types of climate risks – an economic climate that resulted in an elevated cost of living, including the most expensive housing prices in the country, coupled with a political climate of political mismanagement, and topped with a social climate where crime has made California’s big cities unsafe for residents and businesses. In concept, one would imagine that having fewer people around would lower risks associated with climate change, not raise those risks. Indeed, California’s delegation to the House of Representatives shrank due to its declining population.
As for Texas and Florida, those states have been bearing the brunt of hurricanes and tropical storms since residents started keeping records. People were moving into those states in recent years because of the socioeconomic benefits and vigorous political leadership they offered – climate risks did not stop these states from experiencing the highest levels of inbound migration.
The report also insisted this belief: “Climate change is transforming the US housing market through two powerful indirect forces – soaring insurance costs and shifting consumer preferences – which together are creating a feedback loop where climate risks drive population movements and reshape property values across the nation, fundamentally altering traditional patterns of real estate growth and community development.”
I’m sorry, but I have no idea what that last statement is all about. And this circles back to the Chicken Little reference, where the incorrect assumption leads to hysteria and eventual domination by an unfriendly force – in this case, the overheated fear of an increasingly uncomfortable climate bred the Green New Deal movement that tried to reshape the economy by harping on dubious claims that climate change is being driven by such evils as plastic straws, gas stoves and the consumption of beef.
As for the predicted decline in home values, the Wall Street Journal number crunched the First Street Foundation study and came up with this conclusion: “If home values double in the next 30 years – from an estimated $50 trillion today to $100 trillion in 2055 – a $1.47 trillion decline would represent only about a 1.5% decrease.”
Sorry, First Street Foundation, but the sky isn’t falling and the housing market will most likely not resemble your scenario in the year 2055.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
No.
Climate change will definitely affect property values but it will increase the value in some areas and decrease value in other areas. A more general cost everyone will feel fro climate change is the increase in home insurance rates.
Doge will.
Cali wildfires caused by climate change? Does one ever consider why don’t we ever hear about wildfires in the states that have larger more dense forests. Perhaps routine forestry management practices performed in all those other states while Cali protects a snail at the cost of human life. Climate Change still not buying it.