Climate gentrification: rising temperatures and the urban housing market

Is climate change affecting the real estate market? Without a doubt, the answer to this question is yes. Due to an increasing number of wildfires in the west and major floods along our nation’s coasts, homes in areas affected by climate-related disasters are losing their value. While coastal properties were once worth a fortune, many people no longer want to invest in real estate that could literally end up underwater.

A study by researchers at Harvard University, however, illustrates that climate change is affecting the urban real estate market in a different way. As coastal homes become increasingly vulnerable to flooding, wealthy people are selling waterfront properties and moving into low-income areas that are less susceptible to flooding. As properties at higher elevations appreciate in value, low-income families are priced out and forced to seek more affordable housing elsewhere.

The researchers call this phenomenon climate gentrification and identify a few pathways through which it occurs:

• Superior investment pathway: since waterfront property is no longer a sound investment, property values in wealthy, coastal areas like Miami Beach drop as people invest more in poorer neighborhoods like Little Haiti, thereby driving out existing residents.

• Cost-burden pathway: the cost of making homes resistant to flooding becomes so high that lower-income people move out of coastal and water-locked cities altogether (for instance, people leaving Venice for Italy’s mainland).

• Resilience investment pathway: as cities invest in making housing more resilient to climate-related disasters, property values go up and lower-income households are forced out.

Overall, the study reveals that climate change affects not only our weather but also the values of our homes and the demographics of our cities.