Assessing Climate Risks in Real Estate: A Guide for Investors
Key Takeaways
- Climate change directly impacts real estate investment through risks like wildfires, flooding, drought, and extreme weather, which can affect property value.
- Coastal properties face rising sea levels, forested areas risk wildfires, and dry regions may experience drought-related challenges.
- Investors should review climate risk maps, understand local infrastructure and zoning, and secure appropriate insurance coverage.
- Features like fire safety measures, flood protection, solar panels, and energy-efficient materials can help protect ROI long-term.
Climate change is real! And as the impact continues to become more evident, it’d be in your best interest to assess how that can impact your real estate business. This is especially critical to consider when looking to expand your investment portfolio.
This guide by C&C Property Management can help you make an informed assessment of the impact climate change can have on your real estate business.
What are the Common Climate Risks You Should Consider?
The concept of climate risk refers to the potential damage your property could face from climate change. Such risks can include increased frequency of floods, storms, and wildfires.
If you are thinking of owning a property in coastal regions, for example, the property could become vulnerable to rising sea levels. For a property located in a dry region, the climate risk could be frequent wildfires.
By understanding the risks posed and the potential impact on property values, you’d be in a better position to make an informed decision.
With that in mind, here are the top climate risks to keep in mind before buying your next real estate investment.
Wildfire Risks
The Bay Area in California is particularly prone to wildfires. According to Berkeley News, the area has a record of experiencing wildfires in the wildland urban interface. These occur approximately every 20 to 30 years.
The last wildfire occurred on September 9th, 2020. The wildfire burned across Northern California and filled the Bay Area skies with a thick smoke.
The main cause behind the wildfires is the higher average temperatures and prolonged periods of drought. Properties susceptible to wildfire damage include those near open spaces and forested areas.
To mitigate against wildfires, ensure that you do a proper assessment of the property’s fire safety features. For instance, find out the response times by the local fire department, as well as the available defensible spaces.
Also, take out a proper fire insurance policy that ensures you are not financially ruined by an incident.
Flooding
If you are thinking of buying a real estate property near the coastlines, there could be a risk of rising sea levels. Global sea levels are expected to rise by between one and four feet by 2100, according to the National Oceanic and Atmospheric Administration (NOAA).
As such, before purchasing an investment property, first consider whether it lies in a known flood zone. Additionally, find out how well it’s protected by local infrastructure and what the flood mitigation measures will be in the long-term.
To mitigate that risk, you may want to ensure you protect your investment property using the appropriate flood insurance policy. Also, understand local zoning regulations.
Drought & Water Scarcity
Drought is a reoccurring feature of California’s climate. This has had a profound impact on people, agriculture, and ecosystems throughout the state.
Prolonged droughts often lead to water supply shortages, which can impact the livability of a property. For a property that heavily relies on water for maintenance, you’ll most likely incur additional costs during periods of drought.
Because of that, you should consider investing in a property that has certain features. Including, alternative water sources, drought-resistant landscaping, and water-efficient fixtures.
That said, as of January 2026, things are looking up for California. Drought and water scarcity are not currently as widespread. This is due to the exceptionally wet holiday season that occurred between late 2025 and early 2026.
Extreme Weather Events
Inclement weather conditions also pose a significant risk to real estate properties. These include hurricanes, severe storms, and tornadoes.
Therefore, before investing in real estate, this is another concern you should pay attention to. Carefully assess the probability of extreme weather events in every area you have invested in.
How Can a Real Estate Investor Assess Climate Risk?
To assess climate risks in real estate, there are certain tools and resources you could use. They include the following:
- Check climate Risk Maps and data. Many jurisdictions offer these to help residents identify climate-related risks like flooding and wildfires. You can look these up on FEMA.gov and CAL FIRE.
- Purchase the appropriate insurance. Whether it’s earthquake insurance, wildfire insurance, or flood insurance, make sure to take vital steps to manage climate risks.
- Invest in the right properties. Go for real estate properties that are built for resilience and sustainability in mind. For instance, go for properties that have incorporated green features, solar panels, and energy-efficient materials.
Conclusion
To protect your investment’s value and ensure long-term success, assessing climate risk in real estate is essential. Luckily for you, regardless of the climate risk posed, there are tools you could use to safeguard your investment property.
C&C Property Management is a full-service residential brokerage company in California. As a client-centric company, you can count on us for expert investment advice for optimal return on investment (ROI). Get in touch to learn more!
