by Raidin Blue, Senior Analyst – Pembina Institute

Home and building owners risk falling behind as markets increasingly value resilient buildings

As communities brace for another summer of extreme weather, many home and building owners are taking a closer look at how exposed these assets are to climate risks. When it comes time for their next insurance or mortgage renewal, or when they decide to sell, they may be asking: how will last July’s hailstorm affect my costs and options?

Severe weather events are reshaping the real estate market in Canada. As hailstorms, wildfires, flooding, and high-speed wind events become more frequent and severe, real estate and insurance markets are increasingly recognizing these risks and their impacts on building’s values.

A resilient building is one that has been hardened against climate impacts. Enhanced resilience can come in the form of hail-resistant roofing, increased ventilation and cooling measures, as well as flooding and wildfire mitigation measures. The value these measures contribute to newly constructed or retrofitted buildings is often referred to as the green premium. Conventional buildings constructed to minimum standards and that do not incorporate these resiliency measures, on the other hand, are increasingly exposed to the brown discount. Compared to conventional buildings, more resilient buildings benefit from increased property valuations, and lower insurance costs and operating expenses.

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