Where to Live Amid Climate Change

Many older Americans face major challenges due to the cost and availability of housing. In A Place to Call Home, Orion Bell outlined these economic challenges related to housing, and the growth in homelessness and housing insecurity. His article is emblematic of the ASA Economic Security Advisory Council’s focus on the crucial economic issues of housing and well-being in aging.

The first of a three-part series, the article below will provide readers an overview of issues related to climate change, housing and their relationship to economic security.

Where to live has major financial and lifestyle implications. There are large cost differences dependent upon location, which determines access to family and friends, medical care, transportation, recreational opportunities, safety and more.

Climate change adds new considerations to this picture, with specific issues for retirees. Weather events can destroy housing or make the current neighborhood unlivable, and the expectation of future weather events can raise insurance costs and make insurance difficult or impossible to obtain. Experiencing a major weather event can be traumatic and life threatening, and the aftermath of a major weather event can disrupt lives for years.

I am an actuary involved in post-retirement risk research and have owned a home in central Florida for more than 20 years. The articles in this series are based upon research and personal experience, as well as anecdotes from people with whom I have spoken.

Housing Costs and Affordability 

Housing affordability is a major issue, and typically the largest monthly expense Americans face in retirement. Housing costs have risen rapidly in the past few years, causing housing insecurity to grow, and there is a huge variance in housing costs by geographic area, type and housing size.

According to rent café, a website that tracks rental pricing by state, the average rental in March 2023 in the United States was $1,702 per month. The state with the lowest rent was Oklahoma, at $989 per month, and the highest rent was in Massachusetts, at $2,714 per month. Median home prices also varied, as of November 2023, the national median price for existing homes was $387,000, with California having the highest median price at $793,000, and Ohio the lowest at $228,000.

Costs vary by area within states as well, with California’s San Francisco Bay Area median home price coming in at $1.3 million, whereas in the state’s far north it’s $380,000.

Some of the most attractive areas, to which retirees are often drawn, are the most vulnerable to major climate events.

A Bankrate article compared the median housing price for existing homes of $280,700 during the early pandemic (March 2020) with recent median housing prices of $387,000 in November 2023. Median housing prices peaked in June 2022 at $413,800.

But median home prices do not tell the entire story. Mortgage payments depend upon interest rates, the types and terms of the mortgage. Total periodic housing costs for homeowners include mortgage payments, real estate taxes, insurance, maintenance and utilities.

How Climate Fits In

Climate has always been an important factor in determining location desirability. Some households prefer warm climes, and others much cooler. Climate also is linked to access to recreation during the year. Ice and snow present hazards and difficulties in driving and walking.

Living Through Hurricane Ian

Strong storms hit Florida from time to time, and in the fall of 2022, Hurricane Ian made big news. The media ran countless stories of people who had lost their homes and savings. People who lived on boats or in small homes near the shore in some towns were generally wiped out, and many had no insurance. To complicate matters, some also had no computers, or if they did, they no longer had power, and no easy way to contact FEMA and other government agencies to obtain aid (of course those with cognitive issues needed more help).

A friend who lived in Kissimmee, Fla., in the middle of the state near a creek, was flooded out. At nearly 90 and living with cancer, she lived in assisted living in a senior community, but happened to be in the hospital during the storm so not in her apartment when the storm hit and her home flooded. 

She lost her clothes and most of her possessions, and then learned that her home would not be rebuilt because it had flooded several times. Her unit was one of about 500 in the local community that would not be rebuilt due to repeated flooding. Fortunately, she had a friend who was able to care for her and urged other friends to contribute clothes and help arrange for a new place for her to live. It also was fortunate that her important papers were stashed up high in her home and not destroyed.

Lessons learned: Storms and flooding can displace you even when you are not near the ocean. Make sure your papers are in a safe place, or there is a copy of the information you need to recover. 

This experience made me realize that we should pay a lot closer attention to where we live. 

The year 2023 was the hottest on record, with temperatures in the popular retirement state of Arizona hitting 110 or more for 54 days in Phoenix. Catastrophic events linked to climate add another dimension to the discussion of housing, and their increased intensity and frequency makes this a more urgent concern than in the past. Extreme heat, hurricanes, tornados, wildfires, floods and landslides are examples of climate events that can become catastrophic. Smoke can spread over large swaths of land for long periods of time, making it difficult to spend any time outside.

The impact of climate change also may lead to land evolution such as seashore erosion shifting barrier islands. And some of the most attractive areas, to which retirees are often drawn, are the most vulnerable to major climate events. For instance, the 2018 Camp Fire in the foothills town of Paradise, Calif., killed 85 people, 77% of which were older adults.

Some events are immediate, whereas others such as droughts, beach erosion, and wildfires that keep burning can occur over a longer period of time. Some locations such as flood plains, coastal and heavily forested areas have a high probability of future and repeated major events, whereas other areas have a lower probability with uncertainty about when or whether there will be an event or how serious it will be.

The risk of serious events is increasing over time. Serious events can cause property damage or the complete destruction of property, raise the cost of insurance, may affect the availability of insurance, may require evacuation and may present major risks to finances, health and safety.

‘Her unit was one of about 500 in the local community that would not be rebuilt due to repeated flooding.’

Recovery after a disaster can be complex, involving multiple private and government sources. Florida offers a guide to different resources to help with insurance and recovery. The Consumer Financial Protection Bureau also offers a guide on what do to if you have a reserve mortgage and experience a natural disaster.

A 2023 Society of Actuaries study on how Megatrends will influence retirement points to climate change as a major reason for populations needing to migrate and retirees being displaced from their homes in the future. This leads to the question of when property that has been destroyed or seriously damaged by a major climate event should be rebuilt or if the area has become uninhabitable. As my friend learned after Hurricane Ian, there is an increasing recognition that some properties should not be rebuilt, especially when it has been repeatedly destroyed and is in a high-risk area.

The risk and potential impact of experiencing climate events is important for people to consider when choosing the location of their home.

Keep an eye out for Part 2 in our series of articles on housing costs, choices and climate issues.

Anna M. Rappaport, FSA, is an actuary, consultant, author and speaker, and a past-president of the Society of Actuaries. She has served on several government advisory committees. Most recently in 2010 she was appointed to the Department of Labor’s ERISA (Employee Retirement Income Security Act of 1974) Advisory Council.