Formerly white-hot American housing markets such as Austin, Seattle, and Cape Floral, Florida are now facing the steepest declines — bad situations made worse by recent climate disasters, including wildfire smoke and Hurricane Ian. But the real crisis is unfolding overseas, where property markets in China, Sweden, Canada, and others are grinding to a halt. Tooze spells it out:

“In the global economy there are three really large asset classes: the equities issued by corporations ($109 trillion); the debt securities issued by corporations and governments ($123 trillion); and real estate, which is dominated by residential real estate, valued worldwide at $258 trillion. Commercial real estate ($32.6 trillion) and agricultural land add another $68 trillion. If economic news were reported more sensibly, indices of global real estate would figure every day alongside the S&P500 and the Nasdaq. The surge in global house prices in 2019-2021 added tens of trillions to measured global wealth. If that unwinds it will deliver a huge recessionary shock.”

This is the moment Climate Alpha was made for. As the polycrisis scrambles once-reliable economic formulas and triggers a worldwide flight to quality in the world’s overwhelmingly largest asset class, our tools literally tell investors where to go as opposed to when to sell. 

Our Climate Price™ analysis suite generates risk-adjusted valuations of real estate portfolios out to 2040 under multiple scenarios, including the effects of rapid interest rate hikes and faster-than-expected climate change impacts.

Visit www.climatealpha.ai to learn more about how we can help you start preparing for what comes after the crash — or if there isn’t one.

#realestate #housing #climaterisks #creditrisks #housingbubble

The Guardian investigated the coastlines of Canada citing figures from the Insurance Bureau of Canada, a trade body, these 800,000 homes concentrated in the Atlantic Provinces and other coastal areas represent 90% of the Canadian insurance industry’s financial liability. In response, the industry is pushing for a federal government-run insurance scheme similar to the United States’ own troubled National Flood Insurance Program.

“The private market, on its own, cannot handle the level of risk that’s escalating in the system without some sort of formal government backstop or direct participation,” the IBC’s Craig Stewart told The Guardian. Over the last 15 years, for instance, insurance claims from severe weather events have quadrupled, including September’s Hurricane Fiona.

Climate change poses a clear and present danger to a Canadian housing market already under severe stress due to rising interest rates, underscoring how simple rules of thumb — Canada is inherently safer than south Florida — are not just wrong, but also dangerous. At Climate Alpha, our models include variables such as the overall health and structure of housing and insurance markets to create more accurate forecasts of risk and opportunities in the decades ahead. Visit Climate Alpha’s Products Page to learn more about what our tools can do for U.S. customers — and soon, our Canadian ones.

#realestate #flooding #climateadaptation #climaterisks #creditrisk