Navigating the US Housing Market: Unveiling Climate Risks and Price Shifts | Real Estate Market Update w/ Martin Perdomo

Discover the surprising shifts in the US housing market and uncover the potential $1.47 trillion climate risk lurking beneath the surface. As home prices continue their unpredictable dance, certain cities are feeling the heat, while others are basking in unexpected gains. From Tampa's downturn to Philadelphia’s promising rise, we dissect Redfin’s Home Price Index statistics, offering a clear perspective on where the market is headed. With homes lingering longer on the market and selling at discounts, we explore whether this is a temporary lull or a sign of what's to come.

Economist Dave Burt joins us to share his insights on the long-term impacts of climate change on real estate values. Known for his prescient prediction of the 2008 mortgage crisis, Burt casts a sobering forecast on the future of at-risk properties. With insurance costs projected to skyrocket, we analyze what this means for homeowners across the nation, particularly in vulnerable regions like Texas and Florida. Historical examples such as Hurricane Sandy's effect on foreclosure rates paint a stark picture of the potential challenges ahead. Tune in to gain the knowledge you need to navigate these turbulent times in real estate.

Transcript

Speaker 1: 0:00

Welcome back to this week's real estate market update, where we cut through the noise and focus on the numbers that really matter in today's housing and investment landscape. Whether you're a seasoned investor, a first-time buyer or someone just curious about market trends, we've got the insights you need to stay ahead. Let's jump into the latest updates. To kick things off, the US home prices grew by 0.6 percent in january of 20 to 2025. This growth is the fastest we've seen since november of 2023, when prices rose by 0.7 percent. On a year-to-year basis, home prices are up 5.4 percent, although this marks the slowest pace since august of 2023. Let's break this down further. 10 of 50 most populous US metros actually recordeda decline in home prices month over month. Leading the pack was Tampa, florida, with a sharp drop of 1.6%, followed by Dallas with a 0.9% drop and Oakland, california, down 0.7%. On the other hand, some metros showed strong gains Pittsburgh, pa, recorded a 3% increase, nassau County saw a rise of 2.8% and Philadelphia wasn't far behind with a 2.6% increase All in the Northeast, guys, if you're paying attention. So remember, during the boom, we saw an increase. All in the south, right the Sunbelt states, a boom migration during COVID and we saw we also had a boom in the north, up north of north, but now you're seeing the boom still. You're still seeing increases holding steady up north according to Redfin, steady up north according to Redfin. Now, these figures come from Redfin's Home Price Index, which provides a seasonally adjusted look at the single-family home prices. While the 0.6% rise might indicate that the market is moving, economists are signaling that we might see a slowdown soon. Homes are sitting on the market longer and when they finally sell, it's often at a discount of about 2% under the listing price, the biggest discount we've seen in nearly two years. So keep an eye on that moving forward.

Speaker 1: 2:13

Quick reminder if you want to stay up to date on how these shifts in the market could impact your next move, make sure to log in WealthyAFai Again. Log in to WealthyAFai. Wealthyafai Again. Log into wealthyafai. We're constantly updating our members with the latest news, tips and strategies to navigate the real estate landscape. Don't miss out. Sign up today. Go to wealthyafai. Okay, now back to the update. Next up.

Speaker 1: 2:35

We've got some important news regarding the potential long-term impact of climate change on the housing market. According to analysis by First Street, rising insurance costs and other climate-related risks could cause the US housing market to lose nearly $1.47 trillion in value by 2055. That's a big number, that's right. 84% of US homes could see their value decline due to rising costs associated with climate change. To break it down, insurance costs are expected to rise by a national average of 25% over the next 30 years, and that increase 14% will be due to underpricing of current risk, while 11% will be from future climate risk. In fact, several counties in Texas, florida and Louisiana could see their property values cut in half, making them some of the most vulnerable regions in the country. We'll have to wait and see about that.

Speaker 1: 3:33

Economist Dave Burt, who famously predicted the 2008 subprime mortgage crisis, warns that at least 20% of the US homes could experience significant devaluation in the next five years due to these climate risks. According to Burt, we could see a 30% decline in values in most at-risk markets, which would mirror the impact we saw during 2007 through 2012's Great Recession. Now, dave Burt, you've been wrong a few times, so take that with a grain of salt. He's been wrong a few times on crashes and crashes coming and crashes coming. And he's been wrong, so he had it one time. He had it right, so take that with a grain of salt. The numbers get even more concerning, according to this article, when you look at an individual disaster example after hurricane sandy in 2012, foreclosure rates in the affected area skyrocketed by 46, and after the 2008 floods in ames, iowa, foreclosures jumped by a staggering 144. Great data, great facts.

Speaker 1: 4:41

So what does this mean for the real estate investors and the homeowners in the united states of america? Rising insurance premiums will likely be the main driver of home price price declines, but they won't be the only factor. Some communities may also raise taxes to fund resilience measures, and we can expect maintenance and energy costs to rise as well. Now, this is not just a speculation. Industry leaders like Fannie Mae are starting to account for these risks and underwriting processes, but so far, they're not pricing climate risk directly into the market. That means there's still a lot of uncertainty about just how much these climate-related costs could impact the real estate market over the long term. It's clear that climate change is no longer a theoretical concern. It's a measurable force that's already reshaping real estate markets across the US.

Speaker 1: 5:43

As investors and homeowners, it's critical to stay ahead of these trends. I think what we need to be really paying attention to, because none of us can control the climate, but what we all need to be watching for is we need to be watching for how the insurance companies are pricing policies and what direction are they moving in. I don't think we should concern ourselves with all of this other stuff. Just a thought, and that wraps up this week's real estate market update. Remember, staying informed gives you the edge, whether you're buying, selling or investing. Make sure you subscribe to stay up to date and the latest real estate trends. We'll see you next week with more data-driven insights to help you navigate the market. Thank you and peace out.