The climate has always had a significant impact on real estate. As the world grows hotter, climatic events are becoming more severe leading to physical risks which are of increasing concern for property owners. Extreme weather incidents, such as floods and storms, have significantly increased, especially in the Midwest region where it has been predicted that flooding risks will escalate in upcoming years. This will undeniably have an effect on housing costs and could have widespread implications for investors, homeowners, and even insurers.
Changes in weather patterns are no longer novel news; they’re a reality we’re grappling with, impacting a wide range of sectors, particularly real estate. The paradigm of climate change’s impact on real estate is shifting, and it’s vital that homeowners, investors, and other real estate professionals take heed of the changing dynamics and adjust their strategies accordingly.
The Midwest region, known for its enticing real estate market due to affordable costs of living and steady population growth, is likely going to face fundamental changes as it combat the increasing risk of floods. The factors contributing to these risks are multifaceted, ranging from rapid urban development and poor infrastructure to high rainfall and outdated flood maps.
Persistent heavy rainfall in the region has swollen rivers, resulting in frequent urban and riverine flooding. When cities expand, natural lands are transformed into impervious surfaces—structures, roads, and other developments—that do not absorb rainwater. That, coupled with the fact that many cities in the region have aging and often inadequate drainage systems, creates the perfect recipe for disastrous flooding.
As the risk of severe flooding heightens, so does the need for robust disaster risk management strategies. Home buyers interested in acquiring properties within the flood-prone region will inevitably have to factor in the increased costs to protect their homes—insurance premiums, money earmarked for eventual repairs, adaptations for increased resilience, and even the possibility of having to move if the situation becomes untenable.
In fact, in some cases, real estate insurers are withdrawing their services in areas where they believe the risks have become too high, resulting in homeowners bearing the full cost if disaster were to strike. Simultaneously, insurance premiums are skyrocketing in line with the heightened risks.
On another front, local governments have the responsibility to
