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When Climate Meets Real Estate: A Survey of the Literature

Justin Contat, Caroline Hopkins, Luis Mejia () and Matthew Suandi
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Luis Mejia: Federal Housing Finance Agency

No 23-05, FHFA Staff Working Papers from Federal Housing Finance Agency

Abstract: In this paper, we survey a growing body of academic research at the intersection of climate risks, housing, and mortgage markets, with a focus on the United States. With near unanimity, climate scientists project disasters to increase in frequency, severity, and geographic scope over the next century. While natural hazards, such as hurricanes, riverine flooding, and wildfires have historically posed risks to regional housing markets, the systemic risk that climate change may pose to housing and mortgage markets is of increasing concern. To understand the components of systemic climate risk, we survey existing work relating physical and transition risks to mortgage and housing markets, including both single-family and multifamily segments. Our review of physical risks addresses price, loan performance, and migratory effects stemming from flooding, wildfires, and sea level rise. In surveying transition risks, we discuss papers on energy use and decarbonization as they relate to real estate. Where possible, we explain how these topics may intersect with housing affordability and sustainability, especially for historically disadvantaged communities. We conclude by drawing attention to critical areas for research into flood and other climate-related perils likely to pose significant challenges for real estate in the coming century.

Keywords: climate change; hazard risk; sustainability; affordability (search for similar items in EconPapers)
JEL-codes: C5 E3 R1 R3 (search for similar items in EconPapers)
Pages: 89 pages
Date: 2023-07
New Economics Papers: this item is included in nep-ene, nep-env and nep-ure
References: View references in EconPapers View complete reference list from CitEc
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Published in Real Estate Economics.

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