Climate Change Should Make You Rethink Homeownership

Mr. Keys is an economist and a professor of real estate and finance at the Wharton School at the University of Pennsylvania. As the Southeast begins to recover from back-to-back hurricanes, potential home buyers across the country should take notice of the billions of dollars in property damage from the storms, some of it uninsured. The tremendous loss in places such as Swannanoa, N.C., and Keaton Beach, Fla., shows that homeownership in a world of growing disaster risk is less of an asset than it once was. Homeownership is not simply a financial decision but also a deeply emotional one. Its core to the American dream, representing financial permanence and a sense of stability for young and old families alike. But climate change is most likely making homeownership more expensive and less predictable in large areas of the country, and its only . As insurance premiums and property taxes rise and future home values grow more uncertain, its time for some prospective buyers set on living in areas with high risk of hurricanes, floods, wildfires and tornadoes to reconsider homeownership as a financial goal. Renting is quickly becoming a better way for many people to enjoy these places with much less financial baggage. One of the biggest reasons homeownership is not what it used to be is the turmoil in property insurance markets. According to a recent report by Intercontinental Exchange Inc., a data and technology firm, the average property insurance payment for a mortgaged single-family home has by 52 percent around the country since 2019. My with Philip Mulder at the University of Wisconsin, Madison, shows a sharp increase in property insurance in the most disaster-prone parts of the country. In Florida, for example, average premiums have by $1,450 between 2020 and 2023. In essence, the insurance industry has decided that the risk of living in certain areas is now greater than before. For many wealthier homeowners, paying more in insurance premiums isnt a deal breaker. Other homeowners may adjust to growing insurance costs by bearing more of the risk themselves: raising their deductibles, reducing their coverage or dropping insurance policies altogether. But without coverage, families will face crushing losses in the event of a disaster. We are having trouble retrieving the article content. Please enable JavaScript in your browser settings. Thank you for your patience while we verify access. If you are in Reader mode please exit and your Times account, or for all of The Times. Thank you for your patience while we verify access. Already a subscriber? . Want all of The Times? .