Does and should climate change factor into home buying and investing?

Investor · Arizona & Oregon Coast · Member since 2023 · 128 posts · 113 votes

@AJ Wong please explain more your extra water storage. Is your property on city water?

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

Quote from @AJ Wong:

When it comes to successful real estate investment, insight and foresight are essential components to a profitable portfolio.

Insight brought me from LA to the Oregon Coast in 2018, partly fueled by a recognition that the world is rapidly changing and there are some environments that would actually benefit from it. (Imagine how valuable our cottage on the coast become during the Pandemic just 3 years later? We left Los Angeles to hike, boat, fish and escape the madness and have not looked back..)

Speak with anyone that has lived on the Oregon Coast for a few decades, and they will tell you the harsh winters, used to be a lot harsher.

They'll probably mention how the summers are longer, milder and generally year-round the OR Coast is more hospitable.

In fact, in this recent Yahoo evaluation, Curry county on the southern coast was ranked the #1 county in the entire Pacific Northwest, to benefit from the effects of climate change.

Considering the pace of change, and the duration of most mortgages, is climate change something that factors into your investment criteria for yourself or clients?

Having lived and worked in Real Estate in both Florida & California, there are the considerations of fire and water. Florida has one of the most dysfunctional insurance markets in the country (if not the worst) primarily subsidized by a State program as an insurer of last resort. What happens in the next few decades if insurance companies stop (Like State Farm in both States) issuing coverage for oceanfront or waterfront properties due to rising sea levels, higher tides and flooding? They are already raising premiums in 'high risk areas' rapidly, just last week State Farm was approved to raise California policy rates an average of 20%.

Have you been to South Florida lately? The only beaches that are there, we recently put there, with dredged or trucked in sand. At high tides, some condos are literally splashed with waves. There is not beach, where there was once tens if not hundreds of feet of pristine (natural) sand. In just my time there from 1988-2015, there is a visual change, that eventually will become apparent to banks and insurance companies underwriting the RE assets. In short, if it's not insurable, it's not financeable.

There are other considerations as well. Let's say, an STR at a ski in ski out. Less snow? Less revenue. Strong wildfire season? Lower tourist activity. Even on the coast, there are some town with limited water access for new development. Can you believe that? Water shortages on the Oregon Coast! The list goes on...

Is a changing and in some cases challenging environment something that factors into your real estate investment decisions or those of your clients?

Mine certainly are, flood, tsunami and fire concerns at top of mind, Zillow did a survey last year that showed 4/5 buyers factored or considered climate risks.

Top things to consider:

- Flood factor

- Connectivity (electrical & internet)

- Water Source, backup and systems

- Waste & Sewage

- Insulation

- Elevation

- Trees & Fire

Please refrain from political discourse :)

100%.

I said it before, months ago. And got called woke.

You need to be quite strategic on locations-- coastal enough, yet central. If you buy in high-risk areas, it's all cash and be ready for it go away. Anyone that keeps denying this is facing the harsh reality with HOI. This isn't going to get better.

Climate change isn't synonymous with climate getting worse. It's literally just that-- change. We had some inclement weather in the southeast coast before that's rarely seen that, California got a storm this past summer it hasn't seen since 1939.

You don't need to accept the fact there's change, it doesn't need your approval. When you're buying land for real estate, you definitely need to look at this. If you're buying land for acreage or other agricultural investments, you'll realize how much this is changing and the wetland credits, etc.

AJ WongBusiness Member

OP

Real Estate Broker · Oregon & California Coast · Member since 2022 · 834 posts · 696 votes

Quote from @Brian Kloft:

@AJ Wong please explain more your extra water storage. Is your property on city water?

In Coos Bay we were actually on a stream system, we installed a very oversized storage tank and drilled a new well with a separate reserve. In Baja we're technically on city water, although it feeds out community, which also has a back up reserve system of three days. We added a small 250 gallon tank (Roto Plas) at least enough for a few days. We also generally install small on demand electrical heaters (Titan unit) for smaller footprints. Won't operate with Solar but they are very efficient.

All in all, thanks for everyone for contributing to this post. On the ground I'd say half of investor inquiries have some concern for flood, fire or heat. I wouldn't assume that's why they are moving, but it's a consideration for many. I'm biased but the OR Coast was literally the optimal place to be during the 2021 PNW Heatwave. We had smoke but it was tolerable. Hard to find an AirBnB though..

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Investor · Arizona & Oregon Coast · Member since 2023 · 128 posts · 113 votes

@AJ Wong ok being on a well makes sense as to the whole extra water storage. Thanks for the explanation.

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

Quote from @Brian Kloft:

Except out at my desert (off-grid) place, I cannot get a cool shower in the summer. The ground itself soaks up the heat and holds it just like buildings in the city. That's my experience anyway.....

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

@AJ Wong climate change policy includes all the policies that contribute. You have direct policy attributed to climate change (lets get rid of gas stoves, build solar/wind farms) and indirect policy on how we manage what is attributed to climate change. Insurance goes up because the government doesn't subsidize like they used to. Flood premiums are higher. They see more risk and that is their answer to that risk. A lot of what you talk about with fires and coastline is how we manage climate events and manage our resources. Unless you are beachfront you aren't likely to be seeing direct effects of climate change in your lifetime, you will however see alot of impact by what the government does to manage. (e.g. wind farms, solar energy, building limitations.

Investor · Arizona & Oregon Coast · Member since 2023 · 128 posts · 113 votes

Quote from @Bruce Woodruff:

Quote from @Brian Kloft:

Except out at my desert (off-grid) place, I cannot get a cool shower in the summer. The ground itself soaks up the heat and holds it just like buildings in the city. That's my experience anyway.....

Been there on that water temp. We lived in Cave Creek for a number of years. For a good chunk of that part of the water lines going to our house were above ground. in the summer there was no such thing as cool water. We ruined a bunch of clothes (old red clothes bleeding onto white ones because the "cold" water was hot) until the water company buried those lines.

Investor · Arizona & Oregon Coast · Member since 2023 · 128 posts · 113 votes

Quote from @Colleen F.:

@AJ Wong climate change policy includes all the policies that contribute. You have direct policy attributed to climate change (lets get rid of gas stoves, build solar/wind farms) and indirect policy on how we manage what is attributed to climate change. Insurance goes up because the government doesn't subsidize like they used to. Flood premiums are higher. They see more risk and that is their answer to that risk. A lot of what you talk about with fires and coastline is how we manage climate events and manage our resources. Unless you are beachfront you aren't likely to be seeing direct effects of climate change in your lifetime, you will however see alot of impact by what the government does to manage. (e.g. wind farms, solar energy, building limitations.

I disagree that you won't see any effect. You can easily make a claim that some areas are already seeing an effect. Between the hotter temps and thus less snow pack as well as increased population and use, the water supplies to CA, NV, AZ are being reduced and CA has already been having water shortages and they are limiting it. Also due to the extra hot and long summers and increased growth; the CA power grid is seeing more demand that it can handle and causing brown outs in the summer. While there are other factors, such as lack of infrastructure planning on the electric end, government policies or lack of government policies, increase in population; the increase in temps has been a direct cause of these issues.

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

Quote from @Brian Kloft:

Ahhh, but there are other factor that are causing Cali, in particular, to have problems. Namely their inane policies..... from wildlands handling, water infrastructure mismanagement, gas appliance bans, love affair with electric cars, and others. They might very well be having no problems at all if they had different leadership and mindset over the past 20 years.....

Investor · Arizona & Oregon Coast · Member since 2023 · 128 posts · 113 votes

Those are part of the problem. Like most things there is not usually one thing causing the problem. It is the combination of factors. Government, people and environment.

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

@Brian Kloft it is really a question of whether you think the effect is due is climate change or policy. I think it is mostly policy not climate change causing the effect. For flooding we are reaping the benefits of 50/60s building. I grew up in an area that flooded from the day it was bought. It was a NJ swamp to begin with and building houses on it didn't change that. After Sandy the state bought the houses and tore them down. Did it flood more over the years? Maybe, maybe not. People are certainly more aware today. Is that climate change or the fact that we built where we did? Where they were dredging erosion management etc, that has also changed.

Ask yourself in CA if there were so many people and houses in the forest areas years ago, I would hazard a guess there were not because in 1960 there were only 16 million people in CA and now there are 38 million, of course there are water shortages. Where were we building then and now? How do we manage our land? What are desert and forest fires caused by? people. Same in AZ. Is it climate change or the policies and people that have more impact?

Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

There is an existing solution for all of the climate ailments. But even if put in place, we would get more people, then those solutions would need to be expanded or added to. All of the following have their political issues:

1. Cap the population. Everyone that is worried about climate change should take birth control measures to save the planet. No political laws or human engineering.

2. No more expansion of cities. Build upwards. Reduces concrete heat absorption. Improves the use and need for efficient transportation. Trains and bus systems. Keeps more natural habitat which cools the earth.

3. Water. Phoenix hasn't developed a water plan. They need to do a Grey water filtration system like Tucson. They need to put in a regional water collection plan in the country side. Third world countries with Third grade educations do it, with less equipment and dollars. Arizona luckily has the terrain to do this cheaply. This is the same for every Western city.

4. Water. California, specifically central to southern California. Can have all of the fresh water it needs in 1 hour. Just turn off the water gates. Let Tulare Lake, the second largest freshwater lake in the US stay filled and not drain it dry. Not only do you get the water in the lake. But that raises the underground water levels both above the lake and downstream. Plus, this is like a mirror and will reflect heat back upwards, cooling the earth. I'll just have to buy less Lettuce from California and plant more in our garden.

5. Carbon. California. They should go zero Carbon based and go electrical. Again, less well funded communities with less resources have done this. California is lucky to be on the West side of the country. Makes for higher elevation changes from the ocean to the first set of hills. All along the coast they can put in hydro electric dam systems that are not tied to rivers, don't hurt fish or streams. Dam at the top, ocean at the bottom. Use Wave action, Windmill, Solar generation to pump water up the hill to the dam. Let the water release downhill to the ocean through hydro turbines. No one even has to see them, unless they are up on top of the hills. Hook up to transmission lines to the cities.

6. East coast beaches disappearing. Put a fence or rock fence straight out into the ocean. Sand collects on the downstream side and you have a beach within 6 months. Plant some grass on it and establish a self sustaining beachfront.

7. Insurance. Fires or Hurricanes. There are already both building plans and landscaping plans to handle these. Either don't buy insurance, which means you won't get a lender. Or live somewhere else.

8. Corp of Engineers- personal dealings. They do not care or have a mandate for water preservation, or wildlife habitat. Do away with the Corp of Engineers management of all water streams and sources. Just have them control water courses with XX navigable depth. This action will allow greater water retention measurements throughout the US. Currently to put in a 1 acre pond, I would have to pay $120,000 of stream mitigation credits, and then the actual cost to build the pond.

There are many easy, established, cheap methods if your concerned with Water, Fire, Weather events, Temperature etc. They all have political issues around them.

Again, anyone wanting out of LA or Florida that wants to sell their Man made Global warming impaired properties, give me a call. Glad to make an offer on them. Something is better than losing your property.

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Alan F.

Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes