If you are already at retirement age, moving to Florida might make sense. But if you are planning for a future retirement, you should take climate change into account.
Even if you don’t believe in climate change, mortgage lenders, property insurance firms and other essential businesses for home ownership are bracing for potential impacts caused by climate change. What they are finding doesn’t bode well for many of the most popular retirement destinations. Much of the South, many coastal communities from Texas to New York City, and big swaths of the Southwest are at higher risk from one or more of five common climate change effects: extreme heat, drought, wildfire, flooding, and coastal inundation.
Meanwhile, areas that retirees have been fleeing for decades like the Midwest might become more appealing as climate changes. Even in the South, some communities will fare better than others. The mountain town of Asheville, N.C,, which gets milder summers because of its altitude, is already emerging as an early winner of global warming concerns.
As the planet gets hotter and weather gets more tempestuous, protecting your home will grow more challenging and expensive. Real-estate research and data firm CoreLogic has mapped every U.S. structure and how climate change will impact these buildings through 2050. Howard Botts, chief scientist at CoreLogic, says over the next few decades climate “will have a profound impact not only on where people want to locate but also their insurability.”
Future retirees should prepare for climate change just as they prepare for market downturns in their investment portfolios. They can save themselves a lot of costs and hassles by avoiding the places that will be particularly affected by climate change. The good news is there are online tools people can use to start researching climate risks in the areas where they want to spend their golden years.
Costly Disasters
The financial risks from climate change are growing. The National Oceanic Atmospheric Administration (NOAA) said 2022 was the eighth consecutive year the U.S. experienced at least 10 catastrophes causing over $1 billion in losses. Insurer
Aon
said insured losses for Hurricane Ian, which hit Florida in September, was $52.5 billion, the second costliest after Hurricane Katrina.
Climate hazards often build off each other. Extreme heat leads to drought which can increase risks of wildfires, while rising sea levels cause coastal inundation. Warmer air holds more water, making hurricanes more deadly and causing more inland flooding.
Recent analysis by Adam Kamins, senior director of Moody’s Analytics, showed areas along the Atlantic and Gulf coasts have higher risks from acute events such as hurricanes, wildfires and floods, or chronic risks like extreme heat and sea-level rise, with Florida particularly at risk.
Among the top 20 most exposed economies to acute risks were Wilmington, N.C.; Charleston, S.C.; Savannah, Ga.; Jacksonville, Fla.; and Port St. Lucie, Fla., Kamins’ research showed. Florida towns such Orlando, West Palm Beach, and Cape Coral, near Fort Myers, face “significant exposure” to both acute and chronic risks.
A few northern coastal cities are also at heightened risk for excessive heat, sea-level rise and water stress, which can be either drought or flooding. They include Wilmington, Del.; New York City and Long Island.
Meanwhile, the West is getting drier even as its population climbs.
Consider Phoenix, which is now the fifth-largest U.S. city. Home prices shot up 70% in the past five years to an average February selling price of $394,870, according to Zillow.
Sustaining that growth will be difficult as water supplies dry. The city of Phoenix government says the metro region is in its 15th year of drought. The water shortage will worsen as Colorado River water supplies decline and the federal government is preparing to impose mandatory cut to users like Arizona.
Even under the most optimistic scenario by NOAA, Phoenix can expect to get hotter and drier. By 2044, it is predicted to have about 70 days each year over 105 degrees, an increase of 23.5 days since 2005.
In tempestuous Florida, meanwhile, home insurance is becoming increasingly fraught. Florida’s Office of Insurance Regulation has a homeowners rate comparison tool. For a $150,000 value, pre-2001 construction home with wind mitigation in Miami-Dade County, 22 companies offer quotes, from $2,651 to $11,007.
“We have such a crazy homeowners insurance market,” says Michael Wagner, co-founder and chief operating officer at Omnia Family Wealth, who lives in the Miami-Dade region. “There’s no guarantee that you’re going to be renewed every year,.”
Wagner says the Miami area is experiencing more flooding than before. Some neighborhoods now flood every time there is a king tide, a higher-than-normal tide that occurs during certain full moons.
Property values have been soaring in Florida. But there is also evidence climate risks still affect home sales volume and prices. Between 2013 and 2018 homes sales volumes fell 20% in low-lying Florida areas where 70% or more of the land was exposed to six feet of sea level rise, according to research by Benjamin Keys, professor of real estate at the University of Pennsylvania’s Wharton School,.
Do Your Research
Melissa Booth and her husband, Peter Krull, moved to Asheville, N.C. in 2012, leaving Sapelo Island, Ga., after seeing how climate change was shifting the barrier island. They chose Asheville for its cooler temperatures and ample water supplies. The couple were among other newcomers, as the city grew 13.4% between 2010 and 2020. Home values rose 54% to an average $426,000 in the past five years, according to Zillow.
Although Asheville will see temperatures higher than historical levels, it shouldn’t be as hot as other Southern towns. NOAA’s climate mapping tool estimates under a lower emissions scenario, the mountain city will see an average of 13.6 days annually with temperatures above 90 degrees by 2040, which is nearly 10 days more since 2005.
For people who want to avoid heat, moving north to the Midwest may be the most affordable option. Duluth, Minn, which is at the western tip of Lake Superior, will get around seven days over 90 by 2040 under the optimistic scenario. And the city faces little increased risk of drought, wildfire or flooding, according to NOAA.
Duluth, which has fewer people than it did in the 1970s, has seen home prices increase 44% over the past five years, to $237,307 in February, according to Zillow.
Near-retirees can do their own sleuthing to find an area that may do just as well from a climate perspective. NOAA’s Climate Mapping for Resilience and Adaptation page lets users research their exposure to common climate hazards both now and later. Users can click on story maps, such as this one for coastal inundation, and enter a city or county to explore data visualizations. NOAA’s CMRA Assessment Tool lets people view climate projections for their county broken down by early century, mid-century and late century time frames.
Tools from real-estate climate-risk assessment provider, ClimateCheck, and non-profit organization First Street Foundation, put climate hazards into context for individual properties and offer basic suggestions on how to mitigate the impacts on your property.
Tips for Homebuyers
As near-retirees research properties, a few shrewd choices can make a difference in a home’s resiliency. Botts of CoreLogic says his No. 1 climate concern is flooding, including flash flooding caused by intense rainfall. He recommends home buyers compare their home’s elevation relative to flood zones, and look for homes with a first floor that is at least six feet above flood zones.
Botts pointed out even in a city such as Houston, which saw heavy flooding after 2017’s Hurricane Harvey, there is a great deal of variation.
The Kingwood neighborhood, which experienced the worst of Harvey’s flooding, is 48 feet above sea level, while Houston Heights, at 59 feet, didn’t flood.
While older homes have history and charm, newer homes may be built to stronger codes such as having roofs more resilient to high winds.
To learn more about a particular property, talk to local insurance agents about climate hazards, and speak to other property owners on the block if possible. Keep in mind that when you protect your investment, you could also pinch some pennies. “We’re seeing increasingly, insurance companies providing policy discounts for people that do mitigate against loss,” Botts says.
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