Climate Risks to Real Estate: How Climate is Determining Where to Invest

by Patrick Freeze  10/12/2022

Rapid climate change is affecting several industries, including real estate. Although you may not think it affects housing and rental properties, that couldn’t be further from the truth. There are several factors of climate change that may affect the real estate industry. For instance, extreme weather hazards and increased risk of damage are present depending on where you’re investing. So, if you want to learn about climate risks to real estate and what to look for while purchasing properties, just keep reading. 


How Does Climate Change Threaten Real Estate?

Real estate plays a large role in climate change and global warming. In fact, the industry makes up around 40% of the total global emissions. After all, from building materials to electricity, it takes a lot of energy to build and maintain homes. Unfortunately, all of this energy emits a ton of CO2 into the air. 

Overall, climate change affects real estate in many ways. For instance, higher global temperatures and frequent natural disasters affect several buildings and their owners. Each year, homes, offices, and other facilities are destroyed by hurricanes, wildfires, droughts, and tornadoes. 


Although it’s hard to calculate how much real estate is at stake due to climate change, the value is astronomical. After all, the climate affects where and how you live, and certain areas are riskier than others. For example, according to Redfin, $2 trillion worth of real estate parts are at risk of California wildfires. 

That said, climate change is everywhere, and no geographical location is necessarily “safe.” Here are some of the most significant climate risks to real estate that investors, builders, homeowners, and tenants need to know. 

What Are the Largest Climate Risks to Real Estate?

Although there are several climate risks to real estate, three main topics are essential to discuss while reviewing the risks. These risks make it harder to manage the costs and conditions of real estate every year, so let’s discuss them. 

  1. Rising Temperatures
  2. Extreme Weather Events
  3. Damage to Properties

Rising Temperatures

One of the most talked about climate change topics is global warming or rising global temperatures. Although it doesn’t seem like this would have a significant effect on real estate, rising temperatures can bring dangerous levels of wind, rain, and flooding. 


Additionally, temperature increases can directly correlate to the increasing costs of managing rental properties. After all, tenants are starting to rely on fans and air conditioning units to stay cool, which can affect the electrical grid and city resources. And with more demand for electricity and water usage, the cost rises. So, as a landlord, you’re also paying more for utilities that your tenants use. 

Extreme Weather Events

Another significant risk of climate change is extreme weather events. Although they don’t happen in every state, some areas of the US are more vulnerable than others. For instance, in California, giant, hot, destructive fires destroy homes and buildings. These fires can cover millions of acres of land and destroy millions of dollars in real estate.

Additionally, there’s been a rise in Atlantic hurricanes over the past 20 years, with more frequent and intense hurricanes. The increase in hurricane activity results in a higher risk of damage to properties and buildings in these areas. 

Flooding is another major issue when it comes to significant weather events. Floods can seriously affect the structural integrity of homes and buildings. 

Damage to Properties 

You may suffer significant property damage when you own real estate in areas with severe weather incidents. Not only are you paying for extensive, expensive damages to your properties, but the appeal to live in these areas starts to fade. After all, tenants don’t want to live in rentals at risk of damage or destruction from a natural disaster. 

The cost of maintaining properties is also increasing with inflation. Repair bills are more expensive, and insurance premiums are up, all while you’re trying to figure out how to fix your property and keep tenants happy. Luckily, Northern Virginia property management companies can help manage your rental so you can focus on other aspects of your business. 

How the Insurance Industry is Responding to Growing Natural Disasters


As we see first-hand and learn from experience, climate change affects the way most people live. That said, climate change majorly affects how real estate owners insure their properties. For instance, it can be expensive and difficult to insure your property from significant weather events–and prices are rising, 

As such, insurers need to address the impact of climate change on their policies and pricing. The more information investors, homeowners, insurers, and builders have, the better. So, insurance companies must look at the impacts of climate change and work with policyholders and policymakers to alleviate climate risk exposure.  

What Can Investors Look for While Selecting a Property?

If you’re looking to buy a rental property but want to limit the risks of climate change, there are a few steps you can take to do so. 

  • Research the Area- First, do a simple Google search of your investment area and see what risks they might face. Additionally, you can find out how well the area is equipped to handle climate emergencies. 
  • Learn If There’s a Climate Action Plan- Next, you’ll want to determine if the location has a Climate Action Plan and what it entails. property-damages
  • Determine the Cost of Insurance- You’ll need to determine the cost of homeowners insurance, landlord insurance, and renters insurance. It’s also crucial to ensure that your insurance covers flood, fire, and other natural disaster damages.
  • Assess the Build Quality- How well can the property withstand weather events? If the build quality isn’t the best, determine if it can be renovated to make it safer. 

A great tool to use to determine climate effects in your area is ClimateCheck. All you do is enter your real estate investment’s address, city, or neighborhood, and it’ll tell you how climate change may affect your property. You can see all the risks in that area, including storms, fire, heat, floods, and drought. 

Protect Your Rental Investments with Property Management

Besides insurance, one of the best ways to protect your real estate investments is by hiring property management. Although we can’t limit the climate risks to real estate, we can help ensure your investment is properly managed and taken care of.

Professional Property Management in Northern Virginia offers comprehensive rental management services for busy landlords. So, we’ve got you covered if you need repairs or maintenance done at your rental. If you’re looking to market your rental to new tenants, we can do that, too! 

Whatever management tasks you need help with, we’re there to provide them. Contact PPM today if you need rental management services in Northern Virginia.

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