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New Year, Next Century: How to identify Climate-Resilient Real Estate Investments with the Latest PropTech
- Rene Perez
- Dec 31, 2023
- 9 min read
Updated: Jul 31
Climate change is a real concern for many of us, yet when prominent figures in real estate like Grant Cardone or major companies like Redfin or Zillow talk about the “top ten places to buy in the next year,” climate change is usually ignored. Their recommendations are often based on migration to more affordable housing and to places that are “trendy,“ like Texas or Florida. While their predictions on purchases are more than likely accurate, what happens when parts of Florida continue to flood making beachside properties uninhabitable?
Do not ignore climate change warnings, and make sure you are informed about where you are buying. It will have consequences for your home value in the long run.
Below are some of the best climate change analysis tools that I found. In the past, the tools have been quite limited, hard to find or even non existing. These tools are powerful because not only do they look at historical data, but they look into hundreds of thousands of possible weather events to create its predictions.
At the end, I will also share my list of top places to buy in the next few years.
HOMES by AlphaGeo
Their simple website design allows real estate owners to easily estimate the impact of climate change on a specific property. What I really like about this site is that you can easily scroll to specific years and get an estimated home value. It is the ONLY site that I found that is consumer- centric. It gives access without having to submit your information or request a demo to check out the product. Climate Alpha pulls data from Geographic Information System (GIS) data, climate models, census, and economic stats to dish out detailed climate risk data for any spot on the globe. It goes beyond weather, to consider factors like energy grid reliability and economic trends, which can help reduce risk. It's a tool that everyone should at least look at once.
The Founder of Climate Alpha, Dr. Parag Khanna , wrote a book, MOVE: Where people are going for a better future. One of the arguments it poses is Ann Arbor, Michigan as a climate haven due to its resilience against climate change. That is a bit different than the more flashy growing cities like Austin, Texas or Miami, Florida.
Moody's Analytics CRE Climate Solutions: Climate on demand.
Launched in 2021, this product suite is the most extensive and detailed that I found that helps understand and manage climate risks and create probability models.
Their categories include:
●Agriculture
● Builders Risk
● Cyber
● Earthquake
● Inland Flood
●HWind
● Industrial Facilities Model
● Life Risks: Infectious Disease, Excess Mortality, Longevity
● Marine Cargo and Species
● Offshore Platform
● Probabilistic Terrorism Model
● Severe Convective Storm
● Tropical Cyclone
● Windstorm
● Wildfire
●Workers’ Compensation
This is a Google Cloud partnership with Climate Engine : making it the world’s largest climate- connected company dataset.
Having lists of multiple sites that seem to do kind of the same might sound a little overwhelming, yes. But each of these models have something different: one of the use cases of SpatiaFi has been identifying and predicting mosquito populations' travel patterns through their lifecycle, from where the eggs are laid to where they could end up biting a human.
Why is this important? For instance, what if you’re buying property remotely or in the winter? You don’t want to be surprised by a backyard that is not usable because mosquitos are a nuisance in the summer. Having this tool provides an extra layer of security even on a short time interval. If there’s a fire happening, what’s projected? How can a person make sure to make the right decision for their specific location?
SpatiaFi is able to pinpoint specific assets vs just a general area to see how they could be affected. If you own a farm, this is how one might be able to decide which crops a person might want to focus on saving. You could use the tool to create specific transportation routes if a flood or a fire is coming. These use cases and detailed information is usually kept for commercial purposes and for some of the biggest companies. But as time goes on, these tools will be ubiquitous and more accessible to the general public. It only makes sense that as an informed consumer you are ahead of the game.
Some of the biggest companies use SpatiaFfi to leverage Google Cloud's leading geospatial technologies and the world's best available science to support organizations on their journey's to help build a more sustainable, climate resilient future.
“I don’t believe in climate change.“
Even if you don’t believe in climate change, the top insurers and companies of the world do. Big home insurance companies are leveraging these climate change tools to think about how to adjust their policies and rates. This is because climate projections provide crucial insights into future risks related to weather events, sea-level rise, and temperature fluctuations.
This isn’t something that will affect people just 20 years from now. Wildfire-prone areas like California, reveal significant changes in the present time. Some of the biggest home insurance companies like Allstate and State Farm are no longer accepting new insurance applications. Others like Farmers Insurance and USAA have tightened their requirements, limiting the homes that they cover, and increasing their premiums. Where a typical home insurance policy might have cost $800 to $1,200 a decade ago, it can now range from $3,000 to $6,000, reflecting the increased risk. As you think about purchasing a home, make sure to look into the insurability before doing so.
Ok, so where should I invest?
The reality is that no part of the world will be safe from the effects of climate change. Therefore, we should consider making an effort to advocate towards building a sustainable future and taking note of which cities are already doing that. The following list of places not only represent cities that have worked towards building a sustainable future, but also represent climate resilient cities that are growing in population and in infrastructure.
United States
Specific Areas and Reasons
Boulder, Colorado: Known for its sustainable urban planning and resilience to climate-related risks. It's a hub for renewable energy research and green tech.
The average home value is $974,247, reflecting a 3.0% decrease over the past year. The median listing price was $1.3M in November 2023, down 7.1% year-over-year. This indicates a dynamic market, but with recent decreases in home values.
Redding, California : Investment in renewable energy sources, active community engagement in climate resilience, and less susceptibility to sea-level rise.
Ann Arbor, Michigan: With its robust water resources and commitment to green initiatives, Ann Arbor is well-positioned to handle climate stressors.
Prices have been trending down lately. Home prices were down 18.8% compared to last year, with a median price of $405K. Despite this, some home types showed an increase in price, indicating a mixed market.
Asheville, North Carolina: Located in the mountains, it's less prone to sea-level rise and extreme heat waves, making it a safer option.
Home prices were up 10.9% compared to last year, with a median price of $493K.
Raleigh-Durham, North Carolina: These cities are investing in technology and sustainable infrastructure, offering a promising future despite regional climate risks.
In Raleigh, home prices were down 3.4% compared to last year, with a median price of $394K. However, the median selling price in September 2023 was $475,000, a 2% increase from the previous year.
Austin, Texas: Despite being in a state prone to climate issues, Austin’s commitment to renewable energy and sustainable development stands out.
Home prices showed a marginal increase of 0.2% compared to last year, with a median price of $530K. The market here shows signs of stability.
Pittsburgh, Pennsylvania: Transitioning from its industrial past, the city is focusing on green infrastructure and technology, improving its climate resilience.
Home prices were up 11.7% compared to last year, selling for a median price of $229K.
Boise, Idaho: Offers a combination of urban and natural settings with a focus on sustainable living and low risk of natural disasters.
The sale price showed a 2.6% increase since last year, with a median price of around $485K.
Madison, Wisconsin: Offers a balance of urban and natural environments. Its initiatives in sustainable infrastructure make it a strong candidate for long-term resilience.
Home prices were up 13.5% in November 2023 compared to the previous year, with a median price of $400K.
Data taken from Rockethomes, Redfin and Zillow
Mexico
The Mexico market deserves an article of its own due to the fact that Mexico as a whole will be the place of highest land appreciation. Why? As the US and allies move away from Chinese dependency, Mexico will benefit from foreign investment. It is already happening. I purposely did not include the most well known coastal areas in this post because while appreciation will occur, there are many many other places that are not typically written about. A common myth is that Americans cannot own property in Mexico. Good news. As an American, you can own land in Mexico!
Specific Areas and Reasons
Querétaro, Querétaro: A growing city with investment in sustainable infrastructure and lower risk of natural disasters compared to coastal areas.
The real estate market is experiencing an upward trend with a dynamic real estate activity. Developments like Zibatá offer modern amenities and connectivity, making it attractive for investment.
Mérida, Yucatán: Despite being coastal, Mérida is investing heavily in sustainable urban development and has a lower hurricane risk than other parts of the Yucatán.
The real estate market has seen steady growth, with property prices increasing by an average of 5.5% annually. Merida’s market is expected to continue growing in property values in 2024.
Mayan Train (Tren Maya):
A major railway project designed to connect the Yucatán Peninsula's key tourist destinations, including cities like Mérida, Cancún, and Palenque. It will facilitate tourism and economic development in the southeastern region of Mexico.
Puebla, Puebla: With its emphasis on cultural preservation and sustainability, Puebla offers a balance of historical charm and modern resilience.
The real estate market has shown significant growth with the development of both affordable and luxury housing. Infrastructure improvements have boosted the market's attractiveness for living and business. Its proximity to Mexico City also promotes its growth.
While Tesla decided to open its factory in Monterrey, Mexico, - Puebla was close to being chosen as the Mexico location.
Puerto Escondido, Oaxaca: Tourism will continue to foster economic growth. Its airport expansion will contribute to resilient infrastructure.
Guadalajara, Jalisco: Investing in green infrastructure and known for its innovation in sustainable urban planning.
The market has been growing steadily, with a significant trend towards the development of luxury properties. It is considered a reliable and secure investment opportunity with high returns.
Toluca, Estado de México: Its higher altitude and focus on sustainable development make it less vulnerable to climate change impacts.
The market has transformed into a bustling hub of opportunity. Infrastructure and industrial growth have led to a hot real estate market with a diverse range of housing options.
Mexico-Toluca Interurban Train:
This train line is set to connect Mexico City with Toluca, significantly reducing travel time between these two important economic centers.
Global
While Europe as a whole is not looking great in terms of appreciation and climate resilience, it is worth noting that many countries have great environmental legislation. I'm aware that other regions are missing, and I will be updating this article as I gather more information.
Specific Areas and Reasons
Trondheim, Norway: Investing in green technologies and infrastructure, with a stable climate and focus on sustainability.
Helsinki, Finland: Known for its commitment to becoming carbon-neutral and resilient against climate change impacts.
Edinburgh, Scotland: With its initiatives in sustainable urban development and renewable energy, Edinburgh is a promising location.
Bern, Switzerland: Its location and environmental policies make it less susceptible to major climate impacts.
Lyon, France: Investing in green infrastructure and sustainable urban development.
Freiburg, Germany: Often cited as a model of sustainable urban living, with a focus on renewable energy and green spaces.
Ghent, Belgium: Known for its efforts in sustainability and climate adaptation strategies.
Wellington, New Zealand: Its seismic resilience and focus on sustainable living make it a strong candidate.
Victoria, Canada: With its mild climate and focus on sustainable development, Victoria is well-positioned against climate change risks.
How to prepare for a Real Estate Purchase
The era of the local real estate agent is over. What separates a good agent from a great agent is their ability to help you purchase real estate all over the world by leveraging technology. As you move forward in your real estate adventure, make sure to leverage as much information as you can, and make sure that whoever is helping you in your journey legitimately is working in your best interest. I’m always a message away! Please reach out to me! If you have any companies or resources that you believe I should add here, make sure to let me know!
Other valuable links:
Quick Risk Assessment
Projected Climate
AI Climate Risk Tool
3D Property Data
Climate Risk Tool
Fire Forecasts
https://sites.research.google/floods/l/0/0/3 Flooding Information
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