Climate change will leave few things untouched -- including the housing market.
This morning, RE/MAX Canada released chapter two of its Unlocking the Future: 5 Year Outlook, a section devoted entirely to climate. The series of reports in collaboration with relevant area experts will be issued throughout the year leveraging specific “what if” scenarios related to economic policy decisions, climate change, and the future of work, according to RE/MAX.
In the report's second chapter, RE/MAX Canada collaborated with Kathryn Bakos, Director of Climate Finance and Science at the Intact Centre on Climate Adaptation; and Dr. Mike Moffatt, Senior Director of Policy and Innovation at Smart Prosperity Institute, to examine climate scenarios such as floods, wildfires, and severe storm events and their impact on the housing market.
The chapter highlights how the impact on current and future homeowners -- as it relates to climate -- is already being felt through displacement due to catastrophic events, higher insurance premiums, and compromised liveability. The changing climate can be costly. The estimated trend of the overall costs of catastrophic losses has increased from approximately $1B in 2005 to almost $2.5B in 2021 and continues to be on an upward trajectory, highlights RE/MAX.
Chapter two of the report concludes that both climate mitigation and adaptation measures are integral to improving housing affordability, as well as liveability, and should be integrated into a national housing strategy over the next five years. The report also stresses the immediate need to fund and invest in the restoration and modernization of Canada’s green infrastructure -- such as wetlands, grasslands and brown infrastructure, including sewage systems -- among other initiatives, must become a priority for all levels of government.
“These climatic stresses are increasingly colliding with federal and provincial government housing policies, which aim to significantly increase the country’s housing supply to rectify the chronic lack of inventory,” says Christopher Alexander, President at RE/MAX Canada. “Yet, the need to restore and retain green infrastructure -- such as wetlands -- and the immediate need to upgrade our hard infrastructure, particularly sewage systems, coupled with a decline in developable areas due to extreme weather could make these goals difficult to achieve unless these factors are all integrated as one program.”
In the meantime, Alexander says giving guidance to homeowners on how to take advantage of programs that already exist -- such as the Climate Adaptation Home Rating program -- in combination with things such as energy assessment is important to share throughout the home-buying journey.
To protect real estate from the disruption of climate change, new levels of transparency in buying and selling homes should be considered by key stakeholders specifically as it relates to the property’s climatic risk, stresses the report.
“The reality is many home buyers and sellers, do not have a fulsome understanding or awareness of a property’s climatic risk,” says Elton Ash, Executive Vice President, RE/MAX Canada. “Transparency in the home buying and selling process, including disclosure of how key climatic factors influence a home and community, is an important step towards protecting Canadians in their home buying journeys now and in the future.”
According to a Leger survey commissioned by RE/MAX Canada as part of the report, 61% of Canadians believe real estate is the best long-term investment they can make -- and they don’t see this changing over the next five years. However, when looking ahead to their future in 2027, 57% of Canadians say that a key factor that will impact their housing location is climate change and the potential of weather-related events. Furthermore, 25% of Canadians worry that climate change will impact their home/neighbourhood and their home-buying journey over the next five years. Meanwhile, 49% of Canadians are worried about the impact that forest fires, flooding, and other weather-related events will have on their neighbourhood and community over the next five years.
We're already seeing the impacts of climate change on the housing market. Last year, the deadly heatwave in Vancouver sparked a debate about whether air conditioning should be mandatory in homes.