But that story is now common knowledge, Zelman said in a recent interview, which is why he’s shifting his focus to a problem that many of his colleagues pretend not to see and that no one cares about.
“We’re seeing headwinds from climate change,” Zelman told Business Insider in late July. “People are suffering from extreme heat, people are suffering from flooding, damage, lack of insurance. If things don’t get better, what’s going to happen in the long term? I think everybody’s in denial.”
“Nobody has a good answer” for steadily rising temperatures
Climate change is often treated as a politically sensitive issue, even though Zelman believes its effects, such as extreme heat and storms, are impossible to ignore.
“It’s so clear,” Zelman said. “You don’t need a climate expert to know what’s going on.”
Zelman said that whether they are climate change deniers or people who simply deny that it is coming, coastal real estate developers are not worried about rising temperatures.
“Nobody wants to talk about it,” Zelman said. “I’ve talked to big companies, big capital providers, or just operators, developers, and I’ve asked them, ‘What are you going to do? Are you on the coast and are you even considering this?’ And they say, ‘No.’ The board of directors won’t talk about it, so I don’t think anybody has a good answer.” [for]”
The two hottest days on record occurred earlier this week, according to the Europe-based Copernicus Climate Change Service, and while most scientists say this is due to human-induced climate change, the trend of rising temperatures is undeniable, even if it’s just a chance pattern.
“Temperatures are getting warmer and warmer and we’re starting to get hotter earlier,” Zelman said, “so whether you believe it’s climate change or not, that’s irrelevant.”
The effects of climate change won’t just be evident in weather forecasts: homeowners may also experience worsening air quality, rising temperatures, and higher insurance and tax costs.
“Will people be able to tolerate this and can they afford it? Whether it’s air conditioning, insurance, skyrocketing property taxes, whatever,” Zelman said. “So I think it’s going to make people rethink, ‘Where do I want to live?'”
Midwest cities destined to overtake ‘Sunmelt’
Sunbelt states have been among the biggest beneficiaries during the pandemic’s Great Realignment, as the rise of remote work has allowed millions of people to migrate, many of them to warmer southern states.
Data from moving company Allied Van Lines shows that most Southern states saw an influx of residents in 2023. The Carolinas, Tennessee, Florida and Arizona saw the largest net gains, according to the company’s report. Storage service PODS released similar findings this year, with North Carolina, South Carolina, Tennessee, Georgia, Alabama, Arizona and Texas topping the list of states seeing the most moves in 2024 so far.
Allied Van Lines
But Zelman thinks the opposite will be true in the coming years: She predicts millions of people will choose cities with cooler climates, more space and less money to live without the heat, storms and other weather-related headaches.
“Looking ahead five years, immigration will reverse, [the] South [the] “The North, Midwest and Central regions don’t need to deal with all the issues that people are facing right now,” Zelman said.
Zelman may have noticed this trend early, but she’s not alone: Economic researchers at the Federal Reserve Bank of San Francisco recently came to the same conclusion.
“Our results suggest that the ‘shift’ in the US climate-migration correlation of the past 50 years is likely to persist, leading to a reversal of 20th-century migration patterns from the Snow Belt to the Sun Belt,” researchers Sylvain Leduc and Daniel Wilson wrote in a paper published in mid-July.
Zelman believes that instead of so-called “snowbirds” from the Northeast flocking to the South during the winter, people living in the South will become “summer birds,” saving hundreds of thousands of dollars by buying vacation homes in warmer cities or relocating outright.
“There’s a huge arbitrage going on there right now,” Zelman said. “You can sell a property in Miami for seven figures and potentially buy the same square footage for half the price or even less.”
Zelman said the biggest beneficiaries of this upcoming change will be five Midwestern states: Ohio, Michigan, Illinois, Iowa and Wisconsin. Zelman, who lives in Cleveland, believes people will be attracted to these states’ more affordable markets and cooler summers. Plus, with temperatures rising worldwide, Midwestern winters are less harsh than they used to be.
If Zelman’s worst fears about climate change come true, homeowners may eventually be forced to scramble out of the Sunbelt, which his colleagues have jokingly begun to refer to as the “Sunmelt” region, setting off a domino effect that could send real estate prices plummeting.
This trend won’t happen overnight, but as Zelman demonstrated nearly two decades ago when the housing bubble burst, it’s better to react to dramatic market changes sooner rather than later.
