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

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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.

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Episode Transcript

Speaker 1 (00:00):
Welcome back to this week's real estate market update
, where we cut through the noiseand focus on the numbers that
really matter in today's housingand investment landscape.
Whether you're a seasonedinvestor, a first-time buyer or
someone just curious aboutmarket trends, we've got the
insights you need to stay ahead.
Let's jump into the latestupdates.
To kick things off, the US homeprices grew by 0.6 percent in

(00:23):
january of 20 to 2025.
This growth is the fastestwe've seen since november of
2023, when prices rose by 0.7percent.
On a year-to-year basis, homeprices are up 5.4 percent,
although this marks the slowestpace since august of 2023.
Let's break this down further.
10 of 50 most populous USmetros actually recordeda

(00:48):
decline in home prices monthover month.
Leading the pack was Tampa,florida, with a sharp drop of
1.6%, followed by Dallas with a0.9% drop and Oakland,
california, down 0.7%.
On the other hand, some metrosshowed strong gains Pittsburgh,
pa, recorded a 3% increase,nassau County saw a rise of 2.8%

(01:12):
and Philadelphia wasn't farbehind with a 2.6% increase All
in the Northeast, guys, ifyou're paying attention.
So remember, during the boom,we saw an increase.
All in the south, right theSunbelt states, a boom migration
during COVID and we saw we alsohad a boom in the north, up

(01:33):
north of north, but now you'reseeing the boom still.
You're still seeing increasesholding steady up north
according to Redfin, steady upnorth according to Redfin.
Now, these figures come fromRedfin's Home Price Index, which
provides a seasonally adjustedlook at the single-family home
prices.
While the 0.6% rise mightindicate that the market is

(01:54):
moving, economists are signalingthat we might see a slowdown
soon.
Homes are sitting on the marketlonger and when they finally
sell, it's often at a discountof about 2% under the listing
price, the biggest discountwe've seen in nearly two years.
So keep an eye on that movingforward.
Quick reminder if you want tostay up to date on how these

(02:15):
shifts in the market couldimpact your next move, make sure
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Okay, now back to the update.
Next up.
We've got some important newsregarding the potential

(02:37):
long-term impact of climatechange on the housing market.
According to analysis by FirstStreet, rising insurance costs
and other climate-related riskscould cause the US housing
market to lose nearly $1.47trillion in value by 2055.
That's a big number, that'sright.
84% of US homes could see theirvalue decline due to rising

(03:01):
costs associated with climatechange.
To break it down, insurancecosts are expected to rise by a
national average of 25% over thenext 30 years, and that
increase 14% will be due tounderpricing of current risk,
while 11% will be from futureclimate risk.
In fact, several counties inTexas, florida and Louisiana

(03:24):
could see their property valuescut in half, making them some of
the most vulnerable regions inthe country.
We'll have to wait and seeabout that.
Economist Dave Burt, whofamously predicted the 2008
subprime mortgage crisis, warnsthat at least 20% of the US
homes could experiencesignificant devaluation in the

(03:47):
next five years due to theseclimate risks.
According to Burt, we could seea 30% decline in values in most
at-risk markets, which wouldmirror the impact we saw during
2007 through 2012's GreatRecession.
Now, dave Burt, you've beenwrong a few times, so take that
with a grain of salt.
He's been wrong a few times oncrashes and crashes coming and

(04:10):
crashes coming.
And he's been wrong, so he hadit one time.
He had it right, so take thatwith a grain of salt.
The numbers get even moreconcerning, according to this
article, when you look at anindividual disaster example
after hurricane sandy in 2012,foreclosure rates in the
affected area skyrocketed by 46,and after the 2008 floods in

(04:34):
ames, iowa, foreclosures jumpedby a staggering 144.
Great data, great facts.
So what does this mean for thereal estate investors and the
homeowners in the united statesof america?
Rising insurance premiums willlikely be the main driver of
home price price declines, butthey won't be the only factor.

(04:56):
Some communities may also raisetaxes to fund resilience
measures, and we can expectmaintenance and energy costs to
rise as well.
Now, this is not just aspeculation.
Industry leaders like FannieMae are starting to account for
these risks and underwritingprocesses, but so far, they're

(05:17):
not pricing climate riskdirectly into the market.
That means there's still a lotof uncertainty about just how
much these climate-related costscould impact the real estate
market over the long term.
It's clear that climate changeis no longer a theoretical

(05:37):
concern.
It's a measurable force that'salready reshaping real estate
markets across the US.
As investors and homeowners,it's critical to stay ahead of
these trends.
I think what we need to bereally paying attention to,
because none of us can controlthe climate, but what we all
need to be watching for is weneed to be watching for how the
insurance companies are pricingpolicies and what direction are

(06:04):
they moving in.
I don't think we should concernourselves with all of this
other stuff.
Just a thought, and that wrapsup this week's real estate
market update.
Remember, staying informedgives you the edge, whether
you're buying, selling orinvesting.
Make sure you subscribe to stayup to date and the latest real
estate trends.

(06:24):
We'll see you next week withmore data-driven insights to
help you navigate the market.
Thank you and peace out.