An article published by Grist, “The American Dream wasn’t built for climate change,” posits that climate change is making it hard, if not impossible, for many people to buy homes because it is increasing extreme weather and resulting in rising insurance costs. This is false. Extreme weather events are not becoming more common, and so can’t be responsible for rising insurance costs. To the extent that the costs related to natural disasters are rising, it is due to more people and more expensive development in areas prone to periodic extreme weather events, referred to in the literature as the expanding bullseye effect.
“Owning a home has long been seen as a cornerstone of the American Dream, a way to build wealth that you could use one day to pay for your children’s education and fund your retirement,” writes Kate Yoder, senior staff writer for Grist. “That arrangement was always more precarious than it was made out to be.”
“But as fires and floods damage homes and drive up insurance rates, pouring your life savings into a house has become riskier than ever,” Yoder continues. “In a report called ‘Property Prices in Peril,’ the firm First Street projected last year that climate risks could knock nearly $1.5 trillion off the value of American homes by 2055. For some people, the sociologist Rebecca Elliott wrote, ‘the American dream of homeownership may become a nightmare.’”
Home ownership has long been part and parcel of, if not synonymous with, the “American Dream,” and it has become more difficult over time as housing prices and insurance costs have risen, with demand rising faster than supply and material costs, and thus replacement values, increasing.
However, climate change is not a factor in the rising cost of home buying or ownership.
As the series of informational posts at Climate at a Glance demonstrate, there is little if any evidence that extreme weather is becoming more frequent or severe when it does occur. Drought, extreme heat, floods, heat waves, hurricanes, and tornadoes have not become worse over the past century of modest warming, while wildfires and deaths related to temperatures or extreme weather have fallen dramatically.
Grist’s story is misguided, in large part, because it is based on a biased and untrustworthy source for its claims about why home ownership is becoming more difficult. First Street is not a neutral property risk analysis firm; rather, it was explicitly founded to connect climate change to property risk, nothing else. First Street starts with the assumption that climate change threatens homes and businesses and then designs its analyses to make that connection and demonstrate how bad the threat could be. First Street is a climate alarm advocacy group rather than a legitimate risk assessment firm.
Here, here, and here, for example, Climate Realism has debunked multiple mainstream media reports based on First Street analyses in which First Street claimed that floods, wildfires, and property losses related to other extreme weather events were increasing due to climate change, making neighborhoods and cities uninhabitable, uninsurable, or impossible to get affordable insurance for.
The most salient bit of data debunking First Street’s claims that climate change is and will negatively affect property values is the fact that, despite repeated similar reports produced by the firm in previous years, property values have continued to increase rather than decline as predicted. Every year First Street offers a new report claiming climate change will cause property values to decline by trillions of dollars, with each new report citing ever greater losses in value. Yet every year, property values in the areas it focuses on increase, as discussed here and here. In point of fact, if anything is causing a decline in the value of some properties, as explained in a report by the American Energy Institute, it is property listers, brokers, and real estate firms using or referencing First Street’s subjective rating system, a rating scheme whose metrics and methodology are kept secret and whose ratings conflict with official ratings by the Federal Emergency Management Agency.
Rising prices, not falling prices, are the real threat to the American Dream of home ownership. These are driven not by climate change but by a combination of increasing demand while supply is limited by building codes incorporating climate concerns; higher material costs and supply chain shortages; higher property taxes, with the increases reflecting higher home values; higher interest rates due to inflation and Federal Reserve policies; and higher insurance costs reflecting the increased costs of reconstructing and repairing homes after claims due to higher labor and material costs.
In the end, had Grist been concerned about truth and integrity, it would have checked its source, First Street, particularly its track record of bad predictions, data on natural disaster trends, and simple economic theory. Home prices are rising, reflecting increasing demand and limited supply, not fear of climate change impacts suppressing home values.
