Each year sees an influx of people to the world’s megacities. These aren’t just tourists, but net migrants. They come in search of better opportunities and improved quality of living. And they all need a place to live in.
But the big city isn’t for everyone. It promises jobs that pay well and first-class amenities to go with the lifestyle. Yet in order to have everything you want and need within reach, you need premium real estate: an exclusive high-end condominium unit or a comfortable house or apartment in a prime location.
In real estate, the truism holds that location is everything. In practice, though, buyers and sellers alike will weigh many other factors in their property decisions. As the world braces for the uncertainty of climate change, however, we’d be wise to shift our emphasis back to the location as the most vital attribute of any property.
Changing migration patterns drive demand
On paper, the effects of climate change don’t seem too worrisome, especially if you’re living in a great location. Global temperatures are projected to rise by a fraction of a degree over the next decade. Not a problem, you just set the thermostat a hair cooler, and pay a little more on your monthly energy bill, right?
For many people, it isn’t that simple. Figures for temperature increase are averages, which means that some areas won’t feel any hotter, while others experience a more dramatic change, becoming almost unlivable.
The bigger story here is the rising unpredictability and volatility of the weather. Extreme weather events are attributed to climate change. As the trend continues, they will become stronger, happen with greater frequency, and start impacting places where they previously weren’t a problem.
In the big picture, this affects the value of location because some places might not be adequately prepared to deal with the immediate and second-order effects of climate change. In major cities already vulnerable to environmental threats, such as Miami, New York, Houston, and Los Angeles, climate change is already a significant concern among buyers and sellers.
And in some parts of the country, climate migration has already begun. Those residents making an exodus from areas where conditions have become unbearable will be looking for cities with favorable weather. That means even greater demand in the real estate market for those locations.
Unequal effects on the small scale
Many big cities have a problem with climate change, even those that aren’t prone to storms or flooding. They aren’t designed to handle heat very well.
A city’s surface, for the most part, is covered with buildings, parking lots, roads, and other man-made structures. These absorb and retain heat far more than natural surfaces covered with trees and other vegetation, and continue to emit heat even at night. This so-called urban heat island effect can push daily temperatures up to 20 degrees Fahrenheit warmer.
Not all cities have the infrastructure to deal with rising temperatures. Those in cooler climates may actually be more vulnerable, as evidenced during the record-breaking 2021 heatwave in the Pacific Northwest and western Canada. More homes in these areas lack additional cooling or ventilation mechanisms that could reduce the wet-bulb temperature, discomfort, and potential health hazards involved.
Due to these design factors, within a big city, the value of location will also vary greatly. Affluent neighborhoods tend to be better-planned, with ample green spaces and tree cover. Consequently, they won’t heat up as much as low-income neighborhoods, which are more thoroughly covered in concrete and asphalt.
Shifting towards a prime location
As we move even deeper into an era defined by climate change, we can expect to see a shift in emphasis towards property location.
Within a flood-prone city, any property situated on elevated terrain holds a clear value advantage over low-lying addresses. In your average megacity, expect the prices of units in well-designed complexes and homes in planned suburbs to rise.
Climate change will also redefine what we view as prime locations in many areas. Will seaside Miami still be deemed a desirable place to live in after the Champlain Towers disaster and its link with flooding, amid the prospect of record storms to come? How will Chicago cope with the threat of increased flooding and lakefront property erosion as the water level in the Great Lakes continues to rise?
For those with a stake in these areas, now might be the best time to pull out. And for those puzzling over the major decision on where to live should definitely mull over any prospective location’s past and projected climate records, and preparations or lack thereof.