3 min read

Julia Bassett Schwerin of Cape Elizabeth has been a real estate broker since 2005.

The real estate market is approaching a balanced market where supply and demand are in equilibrium and moving away from the seller’s market it has been in since 2020. After the pandemic, demand surged, prices rose and inventory dropped, but now the number of homes for sale has finally started to recover.

My prediction is that prices, which have doubled the value of most homes over the last seven years, will soften as sellers spend some of their massive equity to attract fewer buyers, but will not result in anything like the crash we had in 2008.

The issue that does scare me is that the operating expenses of owning a home represent a larger contributor to the unaffordability of housing than the first cost, which is getting all the attention. Specifically, I am referring to the cost of heating and homeowner’s insurance.

Maine has been doing well transitioning off heating with oil, going from 70% down to 50% of homes burning oil in the last seven years, but oil costs are expected to increase 30% this winter compared to last due to the Iran war. Buyers of more efficient buildings using clean energy are much more able to benefit from paying less in fuel cost than the small increase in mortgage payments for better insulation and air sealing.

For help paying utility bills, check out the consumer assistance information on the websites of the Public Utilities Commission, the Office of the Public Advocate and Efficiency Maine.

Maine has also enjoyed affordable insurance until recent storms caused catastrophic damage. Unfortunately, rising sea levels and severe storms caused by climate change are being sidelined and smeared as a political wedge issue. The weather risks from a warming planet are raising insurance premiums for property both across the board in reinsurance rates and selectively in areas where flooding, wildfires, storms, droughts and pollution have caused damage and claims.

Models ranking address-level property risks from climate factors have been built by several firms and are being closely scrutinized by insurers who have their own databases on losses. As the property damage costs from increased global warming rise, so too will claims for reimbursement by the government; if and when the federal government is unwilling or unable to help people who incurred disaster losses, the private insurers will be left holding the bag.

According to data from the U.S. Senate Budget Committee, the rate of home insurance policy nonrenewal is rising in the U.S. and in Maine. If homeowners can’t afford insurance premiums big enough to share the costs of flood and storm damage with those unaffected, then they can’t afford to live in single-family homes and will have to share housing; the insurers must be doing the math that it’s better for their business to incentivize us to fortify our buildings against climate change than rachet up the premiums or stop renewing policies.

Here is the proof: the Maine Bureau of Insurance, which is responsible for regulating the insurance firms underwriting policies in the state, took it upon themselves to adopt a program designed in the hurricane and tornado belts by the Institute for Business and Home Safety.

Called Fortify, it collects money from insurers and distributes it to building owners in the form of substantial grants to add fortification to a new roof by sealing the roof deck and locking down the drip edge, measures proven in wind tunnel testing to keep the roof attached and the water out.

If insurers with sophisticated data think that enough increasingly scary weather is on its way to Maine to warrant adopting the program, shouldn’t we in the real estate and construction trades act like they are probably right?

What the heck are we doing here bickering about whether we should teach Realtors about sustainability, whether we should adopt stricter building energy codes that reduce emissions, or whether we need to take collective measures to make buildings more resilient to the risk of loss from worsening storms and floods? The answer is a resounding “yes.”

The real estate and construction industries can see this bubbling up like a manhole cover on a side street at the Portland Old Port during a sunny day king tide.

We need an all of us together approach to the transition to clean energy from fossil fuel combustion emissions in buildings, and we need it now.