La Jolla draws millions annually for its scenery and weather and those who want to move here are expected to spend well over the national median for a home.
Local experts are homing in on how the concept of “climate migration,” or human relocation spurred by climate change, is affecting the cost of those moves.
Climate change will have significant effects on the housing sector, according to an April 2022 report by the California Legislative Analyst’s Office.
These effects, from more extreme winters to record-breaking heat waves, mean housing prices are deflating prices in low-income areas and overvaluing homes in coastal communities with low flood risk, noted a February study in scientific journal Nature Climate Change.
La Jolla is “relatively insulated from most … climate risks,” said Tom Corringham, a research economist in the climate & atmospheric sciences department at UC San Diego’s Scripps Institution of Oceanography.
Migration motivators
The climate risks most likely to influence climate migration in California are extreme heat, wildfire and sea level rise, Corringham said.
Though sea level rise will become a problem in California long-term, he said, La Jolla won’t see too many impacts “given the nature of our shoreline.”
The homes on La Jolla Shores beach just south of Scripps Pier are at risk, “but that’s decades out,” Corringham said.
Most concerned about extreme heat, Corringham expects climate change to lead to migration out of California’s Inland Empire and Central Valley, with similar movement from east San Diego County and other Southern California hotspots.
These places – along with other regions such as Phoenix, which reported record days of temperatures above 110 degrees – are not only suffering from average temperature increases but also extended and more intense heat waves.
“You could imagine that people will be driven to the coast by this,” he said.
Wildfires are also pushing Californians and others toward the Pacific Ocean, as the risk of properties burning down increases and homes become “uninsurable,” Corringham said.
In San Diego, those areas most at burn risk are deemed the “‘wildland urban interface,’ the area where civilization ends,” he said, noting communities like Scripps Ranch and Ramona, “where you go from relatively urban, densely populated areas to the rural communities.”
Inventory issues
Corringham “would rather live in La Jolla than in one of these more inland areas” due to heat, he said, as 92037’s marine climate will moderate any temperature increases.
It’s not a solitary sentiment, though many planning moves to the coast will face a difficult search: “There’s limited real estate along the coast in California and San Diego County,” Corringham said.
The lack of inventory is something La Jolla Realtor Christina Torres hears about often, she said, noting scant listings are what drive the market prices here.
Though she’s as yet unsure about how climate change is affecting real estate, Torres does have a few clients who have signed on to look for La Jolla properties to escape weather woes.
One client from Canada is looking to purchase a second home locally, as the winters where he lives are “miserable [for] three or four months out of the year, it’s gotten worse over time,” Torres said.
Another client from Arizona wants to buy a house in La Jolla “because it gets too hot over there,” she said.
Torres is finding that more and more, “the folks that have money or that are retiring [wants] a second house … in a place that’s in a better weather,” she said.
Curbing coverage
The impact of climate change on homeowners insurance is one that affects both a policy’s buyers and sellers, as homeowners in California find insurance companies increasing their rates and limiting their coverage.
Environmental changes have made the insurance market “hugely volatile” in the last five years, said Dan Fernandes, an account executive with Kirk Miller Insurance Agency who specializes in both commercial and residential properties with clients in La Jolla.
“Insurance companies will not write insurance, especially in high-risk areas, unless they are able to ensure they have the capital and reserves to fully meet all insurance claims submitted by consumers, cover their expenses and earn a fair return,” according to the California Department of Insurance.
That’s a tall order, Fernandes said, noting the prices of claims are rising as storm destruction increases.
“The problem doesn’t seem to be calming down,” he said, adding that 2022 numbers indicate that for every dollar of premium paid in, insurance companies pay out an average of $1.09, down from 2019, when $1.85 per dollar was paid out. being paid out.
The highest combined ratio in 2022 was 127 percent paid by State Farm, Fernandes said.
“That’s not a sustainable business model,” Fernandes said, noting more local numbers for San Diego and La Jolla were not yet available.
In California, the model’s instability is exacerbated by Proposition 103, Fernandes said. Passed in 1988, Prop. 103 “essentially required insurance companies to claim prior approval before implementing any type of property and casualty insurance rate increase,” a move intended to save consumers money.
But due to the rate of inflation, the cost of claims and the unprofitability of insuring homes in California, “it’s now having the opposite effect,” he said. “Many insurance carriers [operating] in the state have left.”
California Insurance Commissioner Ricardo Lara announced Sept 21 – with Gov. Gavin Newsom’s support – a package of executive actions to address market sustainability and improve insurance choices.
The cost of insurance is a factor that will affect home prices, Corringham said, as higher monthly or annual insurance burdens “get factored into the price of your home.”
“There are a lot of things we can do to protect our communities in the short term,” he added, “but long-term what’s really needed is a transition to renewable energy and to decarbonize our economy. … Otherwise, these economic impacts are just going to continue to spiral out of control.”
“Ultimately, … everyone feels the effects,” Fernandes said. Going forward, “everyone is going to be impacted by climate change.”
