Beech Trees in Antarctica & Rising Interest Rates

Your HOA doesn't have to worry about the extinct horn gopher!

The average 30-yr fixed interest rate for mortgages hit 7.47% in October, the highest since 2023. Government policy along with business and demographic cycles continue to make housing affordability challenging, but these conditions can change, and in short order. Homeowners can refinance mortgages.

Carbon dioxide hit 428 ppm in August 2026. The last time CO2 was ~400 ppm was 3 million years ago - beech trees grew in Antarctica and the oceans were 65 feet higher. Human culture grew out of a climate when CO2 was ~280 ppm. While adaptation to and mitigation of climate change is very possible, it is anticipated that if we can get CO2 levels to start declining by 2050 (i.e., the “Middle of the Road” scenario) we can keep global temperatures below 3C but temperatures will still be rising beyond 2100.

Though current conditions are not like 3 mya (the Pliocene), the Earth is moving toward equilibrium with the climate humans have created. Very regrettably, some houses are in the way.

The changing climate and its associated risks are affecting the financials of the real estate market – severe weather events can have a larger impact on your Return On Investment than a 7.5% interest rate. I designed the Landscape Asset and Risk Analysis (LARA) to capture these dynamics to inform local real estate investment decisions and to maximize ROI.

One example of price effects in other markets comes from Miami, FL. The Little Havana neighborhood provides homes with lower flooding risk, and enjoy greater price appreciation. Other studies show how home buyers perceive flooding risk can vary greatly regionally, and that house price response to climate disasters can decrease over time. If property with greater environmental risk has a price discount, this will regrettably attract those looking for affordable options, especially in lifestyle communities such as Asheville NC.

While LARA is a powerful tool for understanding the housing market and climate adaption, we feel it critical to support community initiatives in affordability. Affordable housing projects that use public subsidies employ more rigorous environmental due diligence than what the average home buyer uses. We offer LARA to all our real estate clients regardless of income.

Another strategy to support housing affordability is a Community Land Trusts (CLT). To minimize gentrification of low climate risk areas, CLT’s will buy many properties as a non-profit. This requires some mix of grants, financial or land donations. It is a flexible strategy that can focus on single family, multi-family or mixed-use projects. Once owned by the CLT, the homes are sold to buyers but they lease the ground from the CLT. This significantly decreases the cost of home buying while providing equity in the house.

The historically most successful CLT is the Dudley Street Neighborhood Initiative in Boston, MA, founded in 1993 to keep communities together in the face of gentrification and urban renewal. The Houston CLT was founded in 2018 to create affordable and sustainable housing after Hurricane Harvey.

As heat, drought, wildfire, flooding, and severe storms affect home owners, those pricing real estate may not understand these factors. Therefore, homes more resilient in the face of climate change maybe underpriced and homes vulnerable to climate change may be over priced. There are deals to be had and deals to avoid!

While the macroeconomic conditions in the USA will continue to change, pricing landscape attributes (e.g., parks, floodplains, etc…), not just energy efficient construction and appliances, will help stabilize the real estate market. Luckily nature is happy to tell us how to invest sustainability, we just have to listen. Reach out to learn about how LARA is able to listen to nature in the shifting market.