JPMorgan Econ FI-The Long-term Strategist Climate and extreme weather risk is...-106710439 (1)

JPMORGANLong-termStrategy26February2024TheLong-termStrategistLong-termStrategyClimateandextremeweatherriskisnotpricedintoUSAlexanderWiseACresidentialrealestate(1-212)622-6205•Despiterecord-highdamagesfromextremeweatherevents,weseelittlealexander.c.wise@jpmchase.comimpactonUShomepricesatthecountylevel.JanLoeys•WefindthatUShomepriceshaverisenmoreincountieswithhigher(1-917)602-9440jan.loeys@jpmorgan.comclimateandextremeweatherriskfromheat,drought,wildfire,pollution,J.P.MorganSecuritiesLLCcoastalflooding,riverineflooding,sealevelriseandhurricanes.•Since2000,homesincountiesinthetopquintileofclimateandextremeweatherriskhaverisen~40%moreinpricethantheydidonaverageacrossallothercounties.•ThisisconsistentwithotherevidencethatAmericanshavemovedonnettowardsareaswithhigherriskofextremeweather,insteadofawayfromthem.Weshowthatpopulationgrowthwashigheronaverageinmoreexposedcounties.•Homeownersmaynotbepayingenoughattentiontoclimateandextremeweatherrisksastheydonotexpecttobearthefullcosts.Governmentcommitmentstoassistinrebuildingdamagedordestroyedpropertiesmayalsoskewincentives.•Whilerisingpropertyinsurancecostscouldforcehomeownerstofocusonclimateandextremeweatherrisk,itisunclearthatpropertyinsurancepriceshaverisenyetinlinewithrisk.•Thesefindingssuggestthatbanks,insurancecompanies,mortgageoriginatorsandinvestorswithexp...