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The Future. Climate change is spiking homeowners’ insurance rates across the country — even in areas previously considered safe. As economists warn of an impending housing bubble, how the government responds to this challenge could ultimately determine whether the market deflates slowly or pops suddenly — with far-reaching economic consequences.
An inconvenient truth
As wildfire and flooding turn assets into liabilities, homeownership is becoming a greater gamble.
- For generations, buying a home was considered one of the safest and wisest investments.
- But many economists now think we’re on the verge of a new housing bubble — especially since home prices don’t yet reflect climate reality.
- Estimates suggest US residential properties are overvalued by $121 to $237 billion for flood risks alone.
Rent or risk?
Government-backed insurance programs are already strained, with some facing potential insolvency. If these programs fail, it could result in plummeting home values, shrinking tax bases, and significant economic hardship for homeowners.
Experts recommend investing in climate-adaptation measures for vulnerable areas, implementing managed retreat from high-risk zones, and improving transparency about climate risks in real-estate transactions. Or, maybe it’s time to work with Wall Street.
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