The ESG Initiative at the Wharton School
Home insurers aiming for ‘climate risk’ rating system to deal with extreme weather events
Outlet: Global News
The cost of extreme weather is starting to hit Canadians at home – and could, experts warn, put downward pressure on real estate as buyers and sellers realize the true cost to protect a home has been underestimated due to its climate risk factor.
“Climate risk is going to be a growing driver of costs in the housing market,” says Benjamin Keys, an expert in real estate at the Wharton School of the University of Pennsylvania.
“And that means that buyers are going to pay more for insurance, they’re going to pay more in property taxes, and the cost of living in harm’s way is going to go up – and it’s going to go up in a way that we haven’t seen previously.”
Benjamin Keys also says climate risk is going to start to become ‘noticeable’ and even unmistakeable in some places.
“We’re going to start to see this really hitting the average homeowner’s pocketbook in a way that it didn’t 10 years ago,” says Keys.
And, he expects home prices in the most at-risk areas to face downward pressure – as the cost of insuring them, or getting a mortgage, or paying higher property taxes for infrastructure upgrades – rises over the coming years and decades.
“Today’s insurance prices are not tomorrow’s insurance prices.”