US house prices reflect belief differences in climate change, study finds

According to a new study, the effect climate change has on the price of at-risk homes in the US depends on the area’s beliefs about long-run climate change risks.

Researchers from the UBC Sauder School of Business set out to determine whether house prices reflect belief differences in climate change.

The large-scale study used sea level data from the National Oceanic and Atmospheric Administration (NOAA), geographic data about climate change attitudes from the Yale Program on Climate Change, and real estate transaction data from Zillow.

The researchers found that homes projected to be underwater in climate change “believer” neighborhoods sell at a discount compared to homes in climate change “denier” neighborhoods – approximately 7 percent less – even after taking many variables into account.

The results “suggest that house prices reflect heterogeneity in beliefs about long-run climate change risks,” the researchers said.

UBC Sauder School of Business assistant professor and study co-author Markus Baldauf explained:

“If everyone were to say, ‘I’m not buying beachfront property here because it’s going to get flooded,’ then prices would collapse. But if you don’t believe in climate change, you might say, ‘You guys are crazy. Climate change isn’t a real thing, so I see a buying opportunity,’”

“If you wanted to create a society that’s really susceptible to climate change,” Baldauf added, “you would arrange it like they have in the U.S., because the population centres are really close to the water.”

Baldauf also said that it’s not possible to know which price is the appropriate one.

“Which price is the appropriate one? We don’t know. Based on the data, all we can say is there’s disagreement, but it could be that the deniers are right, or it could be that the believers are right. Or it could be that they’re both wrong,” says Baldauf. “All our study says is that they can’t all be right.”

The study was conducted in the US. Baldauf said he expects that the effect they observed would not be the same in Canada or Europe – where belief in climate change is much more ubiquitous.

Journal Citation

Baldauf, Markus and Garlappi, Lorenzo and Yannelis, Constantine,
Does Climate Change Affect Real Estate Prices? Only If You Believe in It (August 30, 2019).
Available at SSRN: or