TL;DR: Last month at New York Climate Week I leaned heavily into sessions from financial and consulting organizations. In the process, I got a lot of insights into macroeconomic trends, power (in every sense of the word), and of course, AI. I've tried to hit all of these topics week by week, because hitting all at once could easily be the length of a new book. (If you need a brief recap of the strange way that Climate Week operates, you can find that in a previous newsletter.)
Today we're going to talk about economic trends, specifically in real estate and insurance. This was the part that set my anxiety to 11. You have been warned.
First, I want to point out that while there was lots of discussion about economics as a system — wealth, workforces, risks, etc. — there seemed to be a massive disconnect between these concepts and the actual people that they would affect. If some of the things I say here sound callous, it's because that's how it was presented: they look at how systems affect systems, not how they affect people.
Finance and consulting are expecting a real estate collapse. In some ways, this isn't surprising. We know that since the pandemic began there's been a lot of empty commercial real estate, which has affected not just the landlords and tenants, but also the support organizations around that: cleaners, restaurants, shops, and other local service providers.
And of course, there have been slowdowns in the residential real estate market due to higher interest rates. Much of the real estate sales have been bolstered by investor purchases, which accounted for one-third of single family homes in the second quarter of 2025. And the same article cites numbers that suggest that the biggest institutional investors are getting out of the game: "Unlike individuals, institutional investors are now selling more homes than they buy and have been for six consecutive quarters." This reflects what I was hearing in New York.
Why aren't individuals buying? Well... the economy has been crunching everyone from service workers to tech workers. This leads to broadly diminished purchasing power.
And then there were the casual mentions of a "reduced pool of buyers and renters." What was meant by that?
A lot of people died (about 1.2 million in the U.S.) or were disabled by COVID (about 13 million in the U.S., numbers which don't account for other forms of disability that were exacerbated by the virus itself or the lack of access to care due to a strained healthcare system).
But now deportations and visa changes have forced some homeowners to sell urgently, or have left landlords high and dry, forcing them to sell their investment properties.
Ok, what does real estate have to do with sustainability? A lot of it comes down to risk.
- Insurability. As California residents know already, insurance companies are pulling out of states with high risk for floods, storms, and fires. Numbers that were casually thrown about: approximately half of U.S. states will not have broad access to insurance in 3-5 years, those who can be insured will be paying staggering premiums, and that the U.S. will become "broadly uninsurable" within a decade.
- Mortgages. Most people can't buy a home outright. But guess what? If you don't have insurance, you can't get a mortgage. It's unclear how this will affect existing mortgages, but it was openly discussed that new mortgages won't be underwritten without insurance. And if you can't sell, you'll reduce your price until someone can afford to buy.
- Commercial leverage. Apparently for a while there was a belief that commercial real estate could get around the insurance issue with leveraged assets. Except that the assets that companies leverage? Real estate. So for example a Microsoft building in Redmond, Washington could use a building in Northern Virginia as collateral... except that this is a house of cards of uninsurable properties acting as collateral for other uninsurable properties. This is going to affect companies' bottom lines, which will affect their valuations, which will have an impact on the stock market, which will have an impact on your 401k, which will... you get the idea.
Commercial insurance has only been focusing on structures, not systems. I had an eye-opening conversation with someone in commercial insurance. Let's say that your Widget Company comes to me for insurance. I'll insure your building, and maybe even have some additional limited coverage for "disruptions" to business. What none of this takes into account is people.
What happens if the storm or wildfire takes out a large swath of residences and your workers have nowhere to live? What if water or electricity are disrupted to homes for an extended period, like during Hurricane Katrina? What happens if the agricultural supply chain is disrupted and food is limited? You can't have a business without a workforce, and nobody insures for that. Again, one key disaster can hit valuations hard, rippling through the stock market.
It was widely cited that 2/3 of global wealth is in real estate. So, uh, what happens if this implodes?
Look, I obviously don't have the answer to fixing this, but I do feel obligated to point out the gathering political, climate, and economic storms that are converging.
If you're still reading next week (and not curled up in the fetal position in a corner), I'm going to talk about the random gossipy miscellany from the week. A palate cleanser of wackiness to close out this series.