Reflections on MIT Climate and Real Estate Symposium (Dec 4-5, 2022, MIT, Cambridge MA)
The program included multiple high-quality paper talks. Linde Kattenberg presented her paper on returns to home insulation, estimating how households can save by installing insulators. At 2022 gas prices, insulator installation translates into an €866 reduction in the annual gas bill. Dongxiao Niu presented her work on the response of commercial sectors respond to hurricanes. Being inundated after hurricanes made landfall would lead to a price drop of 1.5%~3.5% for commercial properties. Rogier Holtermans from the University of Guelph presents a paper on commercial mortgage and finds that both Harvey and Sandy led to elevated levels of commercial mortgage delinquency. Rachel Meltzer from Harvard University shared her study on Hurricane Sandy and showed that housing prices on blocks hit by high storm surges drop by about 16 percent and remain 12 percent lower than pre-storm levels six years after the storm. Philip Mulder from US Treasury shared his work on the welfare effects of flood risk information - misclassifying home risks causes owners to under-estimate their flood risk, invest less in adaptation, and buy less flood insurance.
Additionally, the program contained interesting keynote speakers. Benjamin Keys showed that after Hurricane Sandy, where prospective homebuyers account for updated beliefs on climate risk more than current homeowners. This leads to a decline in volume and a delayed price response. Nancy Wallace focussed on the key issues in the insurance market that the California market is facing in the eye of increased wildfire risk. She additionally elaborated on her efforts to foster the public accessibility of data. William Wheaton talked about the disparity between the perception of climate risk between renters and homeowners, where he found that rents have actually grown in high flood-risk areas compared to lower-risk ones. Amine Ouazad elaborated on protection mechanisms from floods, such as levees. He distinguished between the work and living locations of people and finds that house prices in levee-protected areas increase, regardless of whether the work location of people is flood protected. Nils Kok shared his views on emission reduction strategies that the real estate sector has been implementing, and the role of market dynamics.
Overall, all the participants reflect on a successful event with fruitful discussions and insightful presentations on climate risks and real estate. Let's look forward to the next gathering and more great work coming soon!