A new report from Redfin details why both homeowners and renters move in 2024. While the top reasons are the same they’ve always been—the desire for more space, greater affordability, and being closer to family members—a couple of reasons chosen by significant numbers of respondents stand out. These are worries about crime and climate impact.
In total, 17.5% of respondents said they planned to move within the next year because of crime concerns, while 13.7% said they planned to move because of climate risks. These two concerns loomed larger in people’s minds than the search for areas with lower property taxes (11%), changes in family circumstances (10.3%), and better school ratings (8.8%).
Of course, any report gives a limited snapshot of the population as a whole, and how these figures play out in reality will vary depending on location. Nevertheless, these are intriguing figures worth investigating in more depth. Who exactly is worried about these things, and should investors consider these factors when making their investment decisions?
Worried Homeowners vs. Carefree Renters? It’s Not So Simple
Logically, it makes sense that homeowners overall would worry more about longer-term issues like climate change. Per the report, 20.4% of homeowners worry about crime in their current area versus 16.3% of renters. When it comes to climate concerns, the disparity is larger: 17.4% of homeowners versus just 10.6% of renters.
The temptation here is to say that, of course, homeowners are more concerned—they have to deal with repairs if their property is damaged by extreme weather. In addition, because selling a family home isn’t as simple as leaving a rental, they have to put up with the impact of local crime for longer. The traditional idea is that renters simply don’t have to worry all that much because they’re much more mobile than homeowners. If something goes seriously wrong, they can just leave.
But this is only part of the story and doesn’t account for the shifting realities of renting. People’s perceptions of risk are changing because their experiences of renting are changing. Let’s look into some examples of how this is playing out.
The Crime Factor
Obviously, concerns about crime are nothing new. Both renters and homeowners will almost invariably prefer areas with lower crime rates—except, of course, in hot markets with very limited inventories, where people may not have as much of a choice. Renters in hot areas will compromise, at least initially. Some will move into an area that has higher crime but is cheaper.
Chicago is a great example of an ever-popular city with a very hot rental market, but it has its fair share of problems with crime in certain areas. For an investor, this type of city presents plenty of opportunities but also extra work in terms of minimizing the associated risks and reassuring tenants who are worried about crime in the area.
Jonathan Klemm, a real estate investor in the Chicago area, describes the evolution of his investing strategy to BiggerPockets this way: “I started investing in better areas and then sought out higher-risk/higher-reward areas with multifamily properties on Chicago’s South Side.”
Klemm confirms that “especially on the South Side, there are neighborhoods where crime is the No. 1 factor,” and tenants in this area want to not worry “about fires, drugs, crime…it is a huge issue.” At one point, he even recalls having had “to talk to the third precinct tactical drug unit.”
That said, Klemm doesn’t want to dissuade other investors from investing in areas that are ultimately high risk but high reward. You will have to do extra work to secure your property and give your tenants the reassurance they need.
This will especially be the case for investors renting to people over the longer term and single women. Female respondents in the Redfin report were more likely than men to cite crime as a significant concern. And we know that more and more single people rent alone than ever before—16.7 million as of 2023. Overall, they rent for longer, too, with 1 in 6 renting the same place for 10 years or more. It is a very different proposition to live with the risk of crime when you are living on your own and planning to stick around for a while.
The Climate Risk Factor
Climate risk traditionally has been a nonfactor in most people’s moving decisions. Despite all the warnings and extreme weather events, people have not stopped moving to California, Florida, or any other attractive and beautiful places that just happen to be at high risk from climate change impact.
There have been some signs that there are local pockets where this is changing. The most obvious example by now is Florida, where home sales have slowed down, largely as the result of extreme weather impact and problems with home insurance. The same problems are affecting parts of other states, notably California and Louisiana.
Until now, though, most discussions have focused on homeowners and their concerns. That’s because homeowners are more affected by hypotheticals than renters. Home insurance premiums go up even in areas that haven’t been directly hit by a hurricane because insurance companies are trying to safeguard themselves against future possibilities.
Renters do not have to worry about insurance premiums, or what may or may not happen to a house they will have left in two or five years’ time. This, though, is again the old narrative. The new reality in several U.S. regions is that renters are increasingly directly impacted, and that’s what changes everything. If your home floods or burns down, it doesn’t matter whether you own or rent it: You will lose everything.
Robert Washington is the owner of Savvy Buyers Realty, which operates in the Tampa/St. Petersburg area. His most recent experience is that he is “starting to see” tenants pay more attention to flood zones—something that previously just ‘‘wasn’t on renters’ minds.’’ Why not? Because “before Hurricane Helene, it was a pretty rare occurrence for homes in most flood zones to actually flood.”
Something that is a theoretical risk just isn’t going to deter renters from moving to desirable areas in warm climates. However, Washington told BiggerPockets that recently, “Many tenants who didn’t have renter’s insurance to cover their personal property lost everything.” And once you know someone who happened to, you may think twice about your own moving decisions—or may be spurred to move out of a high-risk area.
We know that even the secondhand experience of a friend or family member has a significant impact on how people perceive risk. Fannie Mae asked homeowners and renters about their experiences with weather-related property damage in a survey in 2023. Interestingly, most renters (62%) had not experienced weather-related damage themselves but had seen a family member or friend experience it.
As a result, almost half (49%) of respondents said they were very or somewhat concerned about the possibility of weather-related damage to their homes. As we can see, you don’t have to have had your own roof blown off by a hurricane to become worried about climate risk; you just need to have seen a trusted source (e.g., family) who did.
Finally, worries about climate risk aren’t just about property damage. Renters and homeowners alike worry about the potential health impacts of changing climate patterns. The climate factor cited by the highest percentage of renters (34%) in the Fannie Mae report was extreme heat. There is no federal law that requires landlords to provide AC units in rentals; it may not be a huge problem if you’re renting in Minnesota, but it is a potentially life-threatening situation somewhere like Texas.
Extreme heat in areas that are affected by wildfire smoke also translates into poor air quality. While a few days of bad air during the summer will not deter anyone from renting in their chosen location, if poor air quality becomes a regular occurrence (as it already has in some West Coast cities), it can become a factor in people’s decision to move. Any such concerns will be larger among younger age groups—the Redfin report cites that 14.9% of Gen Z respondents are worried about climate factors, as opposed to 12.5% of their Gen X counterparts.
Again, the changing patterns of renting will play a part here. People rent longer and later in life. The median age of a U.S. renter is now 40 years old—much closer to the age groups likely to worry about the impact of poor air on their lungs and other potential health issues caused by extreme weather.
Final Thoughts
Of course, it’s important to put these factors into perspective. Climate change or crime concerns alone are highly unlikely to make a renter move from their chosen location, provided everything else is fine.
What investors should watch for here is the tipping point effect. Given that these concerns are now at the back of people’s minds, they may well become one final contributing factor to decisions that are already being thought over. If a tenant finds somewhere that’s more affordable and spacious in an area they perceive to be safer from climate and/or crime risks, all the factors combined may just be enough to get them to move.
You shouldn’t choose a location based purely on climate safety, nor does it necessarily make sense to avoid an area with some crime issues if you are an experienced investor. But you’ll need to be absolutely certain that the major factors that go into renters’ decision-making are solid: an affordable, spacious home where they’ll want to stay, all things being equal.
Find the Hottest Deals of 2024!
Uncover prime deals in today’s market with the brand new Deal Finder created just for investors like you! Snag great deals FAST with custom buy boxes, comprehensive property insights, and property projections.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
