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How Will Climate Emergencies Affect Home Prices?


How Will Climate Emergencies Affect Home Prices?

The climate crisis could have serious implications for the U.S. housing market, says 'Big Short' real estate investor Dave Burt

May 30, 2023
Flooding from Hurricane Ian in Florida
Image: bilanol / stock.adobe.com

Dave Burt, CEO of investment research firm DeltaTerra Capital, and one of the few who warned of the subprime mortgage crisis ahead of the 2008 housing market collapse, is now sounding the alarm about climate-related costs in today’s market. Burt hypothesizes that extreme weather events caused by a worsening climate crisis, such as more destructive and more frequent floods, tornadoes, hurricanes, and wildfires, could reduce home prices and put mortgage borrowers at risk of not being able to pay back their loans.

After Hurricane Ian in September 2022, Burt's company predicted that Florida home values could drop by as much as 50% in some areas prone to heavy flooding, and the risk of further home price declines will only increase as the effects of the climate crisis become more pronounced, Insider reports.

Mortgage lenders are overestimating the value of many homes because they've failed to take into account how much of a threat flooding poses, said Burt, now the CEO of investment research company DeltaTerra Capital. 

It's not Burt's first warning. He said in April that about 20% of all houses in the US were overvalued in mortgage underwriting, which means the housing market could be worth up to $200 billion less than current estimates.

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