When we think of the Arctic, we typically think of polar bears and ice. We hardly think about how changes in the Arctic can affect the rest of the world. These changes can affect climate patterns and have socioeconomic impacts. Check out these 4 facts about real estate climate change.
Arctic Warming Means Colder Weather
The Arctic sea ice covers less area than it did before. As the region records warmer temperatures, the results of these temperature changes are thinner ice. The extreme cold weather in Europe and North America might be due to this warming. These physical climate changes can adversely affect real estate.
Climate Change Is Risky Business
There are two types of risk involved. These are physical risks and transition risks.
Physical risks can be caused by catastrophic events like hurricanes, drought, and wildfires. These unplanned events can cause significant damage. What is the outcome? Well, real estate owners will incur the high costs of repairing, reconstructing, and maintaining the structures. There will also be business costs and economic costs, in terms of productivity.
Transition risks are more difficult to predict. There might be higher property insurance costs, since we cannot foresee climate change’s future effects. There is no telling how badly these risks will affect the real estate market.
Rising Sea Levels Are Affecting the Land
Rising sea levels are negatively affecting the East Coast. The First Street Foundation reported that rising sea levels caused an estimated $16 billion loss in the real estate market from 2005 to 2017. The East Coast also faces the inevitable progression of falling land.
Gateway Markets Are Under Threat
The Urban Planning Institute refers to New York and San Francisco as gateway markets. They are hubs for commerce and culture, and they have economic appeal. Unfortunately, these gateway markets are vulnerable areas, since they are on the coastlines.
Above all, you should not take climate change lightly. While the Arctic seems too far away to be important, we should not ignore what is happening there. That is because the effects can be costly and harmful to the real estate market. Whether you own land or rent a building, understand that you, too, will be impacted.