CoreLogic® Analytics investigates how climate-change influenced extreme heat contributes to physical property risk
Co-Authored: Tanya Havlicek, Principal, Data Scientist; Kent David, Sr. Leader, Analytics Consulting; & Anand Srinivasan, Executive, R&D Product Marketing & Innovation
More than 100,000 daily high temperatures in the United States have broken or tied records in recent years, and the 10 warmest years on record have all occurred since 2010.
Although many parts of the U.S. are accustomed to high temperatures, extreme heat coupled with high humidity can turn fatal when it exceeds 95 degrees Fahrenheit. Individuals most at risk are the elderly, very young children and those with comorbidities. Extreme heat also fuels other environmental perils that put properties at risk of significant financial impact.
Rising Temperatures Coincide With Other Physical Property Risks, Impacting Billions in Property Value
Climate risk analysis spanning the period between 2000 and 2021 for geographies with a maximum daily temperature of at least 104 degrees Fahrenheit reveals multiple physical weather hazards associated with extreme heat and climate change. The properties exposed to these hazards include hundreds of thousands of homes that could incur billions of dollars in reconstruction costs.
The physical risks that heat waves present for properties compound the already risky human health situation. Furthermore, shifts in weather risks for homes inside and outside the extreme heat belt can change homeowners’ insurance pricing, availability and affordability.
Key Findings
- CoreLogic catastrophe models suggest that natural hazard risk will progressively worsen in parts of the U.S. that lie in the extreme heat belt.
- ZIP codes that have had at least one 104-degree Fahrenheit day since 2000 are more impacted by severe convective storms and cyclones.
- Inland flood risks jump for properties in areas with hot days, and 250,000 homes worth $69 billion in reconstruction costs are projected to experience large risk shifts for inland flooding between now and 2030.
Correlated extremes of climate change have the potential to add the risk of physical property damage on top of endangering health. These shifts in climate-related weather risks alter insurance availability, pricing and affordability amid varying likelihoods of these damaging events. In the future, these rising risks will influence the desirability of certain areas and likely impact home prices in some places.
