It is still too early to completely calculate the costs of the forest fires in Los Angeles, but one thing is clear: the insurance costs will increase, and this will not only influence the value of La properties, but also from real estate across the country.
The losses of these forest fires may now seem unimaginable, but they have actually been part of a calculation that the experts for climate colors were recently modeled because they are trying to measure the effects of climate change on the house values.
By 2055, 84% of all US houses after an analysis of First Street, a climate disease company, can attribute a certain value of $ 1.47 trillion in losses.
“Climate change is no longer a theoretical concern – it is a measurable force that redesigned real estate markets and regional economies in the United States,” said Jeremy Porter, head of research in the impact on the climate implications in the first street.
According to the report, the insurance is expected to grow by a national average of 25% over the next 30 years, with 14% due to the current sub -vote of the risk and the additional 11% due to the increasing climate risk over this period due to the increasing climate risk. The real estate value effects are only about -3% on average, but there are some areas in which you are expected to lose considerable value. According to the report, about a dozen counties in Texas, Florida and Louisiana were able to halve the houses.
Dave Burt, founder of Deltaterra Capital, also calculates the climate health for real estate.
Deltaterra is an investment research and consulting company that provides institutional investors and other instruments for measuring and management of financial risks in connection with climate change.
In the next five years, at least 20% of the US houses will be devalued in any way by the effects of climate change, said Burt.
“In the past, the insurers have not increased prices due to these increasing weather events,” he said. “This is all apart now because the fragility of the system and some of the insurance market errors we saw in recent years have seen.”
Burt was one of the few who predicted the risks on the subprime mortgage market almost two decades ago, and he earned a lot of money against these loans. Burt says he sees a similar pattern that appears with climate change. When the growth of the climate risk forces the insurance industry to test higher, the home levels will decrease because the cost of possession of a home decreases, he said. The correction, he said, will be serious.
“We believe that 20% of the markets could decrease by 30% in the next five years, which is very similar to the great experience of the great recession from 2007 to 2012,” said Burt.
And he's not alone. Senator Sheldon Whitehouse, D-Ri, warned of the risk of hearing the finance minister Scott Bessent.
“The most immediate danger of a great economic collapse will come through the insurance industry,” said Whitehouse in January. “We already see it. The fire in LA makes it worse in California, but it occurs nationwide … where you can't get any mortgages, they cannot sell real estate for value.”
While experts have been warning for some years, their predictions are expected faster than before.
“The growing climate -related disaster risk has accelerated much faster,” said Ben Keys, professor of real estate and finance at the University of Pennsylvania. “Ultimately, assets have to find a new balance to delete the market.”
And foreclosure contribute to this. After the hurricane Sandy in 2012, foreclosure in the affected areas rose by 46%, and after the 2008 floods in Iowa, the enforcements rose by 144%according to First Street.
The mortgage market is not aware of this rising risks.
Fannie Mae rejected an interview for this story, but CNBC spoke to her chief climate officer Tim Judge on the same topic in 2023 when the mortgage giant began to study the climate crisis in underwriting.
“The amount of climate change is not always on the market, and consumers are not really aware of what this will do for the future insurance premiums,” said Richter.
Two years later, Fannie Mae still does not explain the climate risk of his underwriting at real estate level.
“The decisions that Fannie and Freddie make lead the mortgage market directly from the price risks of the prices,” said Keys.
In the meantime, Deltaterra's Burt is again.
“We help customers integrate our understanding of roadmap into security strategies,” said Burt. “This can either avoid the most endangered securities.
Increasing insurance costs are the main factor for the price of homes, but not the only one. Some municipalities can increase taxes to pay for resilience measures. Maintenance and energy costs can also increase.
Despite all of this, the Trump administration ordered the FEMA employees to immediately terminate the standard of the Federal Flood Risk Management on Friday. This is the standard that ensures that public buildings, including schools as well as bridges, streets, supply companies and other infrastructures, which are damaged in a flood, are rebuilt in a way that would make it less susceptible to future floods.
-The CNBC Senior producer Erica Posse contributed to this piece.