Why the Megarich Insist on Buying Homes in Extreme Weather Zones
It is no surprise to anyone that the weather is making huge swaths of the U.S. increasingly inhospitable. Even places that were long considered safe zones, such as Vermont, which saw catastrophic flooding from Hurricane Beryl in 2024, are seeing more frequent and more ferocious natural disasters such as fires, floods, hurricanes, heat waves, droughts and landslides.
Homeowners in these areas are wrestling with what to do; stay and learn to live with this Sword of Damocles and its commensurate inconveniences, damage and skyrocketing home-insurance costs; or move somewhere that doesn’t threaten destruction on the regular—an expensive, gut-wrenching option, especially for longtime and multigenerational homeowners and lower- or fixed-income residents.
Then there are the megarich, who don’t have to wrestle with any of these bad options. Instead, they are moving in droves to risky places and setting home-price records when they get there.
In Palm Beach, Fla., William Lauder, chair of the board of directors of the Estée Lauder Companies, went under contract in February to sell a vacant, oceanfront double lot for close to $200 million. If it closes near that amount, it would set a Palm Beach record. Meanwhile, recently updated FEMA flood maps of Palm Beach County just added thousands of parcels to its high-risk flood zones.
In Miami, sea level is predicted to rise up to 17 inches by 2040 compared with 2000 levels, according to the Southeast Florida Regional Climate Change Compact. In February, a home on the city’s Star Island sold for $120 million, a record for Miami-Dade County.
In Charleston, S.C., an unidentified buyer paid a city record of $18.25 million for a historic waterfront home on the Battery in February. In Charleston Harbor, there were 52 major flood events recorded between 1922 and 2023; 38 of them have occurred since 2015, according to data compiled by the National Weather Service Weather Forecast Office in Charleston.
Paradise Valley, Ariz., the tony enclave near Phoenix, saw a record-breaking $33.5 million home sale in January. In 2024, the Phoenix area saw a record-breaking 113 consecutive days over 100 degrees, according to data compiled by the NWS Weather Forecast Office in Phoenix.
Why are the megarich streaming into these high climate-risk areas and paying record prices? They want to and they can.
“There are rational reasons why they are moving to those locations,” says Milton Pedraza, CEO of the Luxury Institute, a research and consulting firm in Boca Raton, Fla., and New York City. “The love of the ocean, the love of the people who are there, the restaurants, the culture. Also, where are my people? Where’s my tribe going?”
Oceanfronts, mountainsides, sweeping desert vistas—these areas have long been the locales of choice for the wealthy and they are not going to let climate risk harsh their vibe. Plus, these locations confer status, especially for people who are new to vast wealth, says Clay Cockrell, a licensed clinical social worker who has many wealthy clients. “There is ‘I have always strived for this, I’m going to have it, damn it, whether it floods or not.’”
As the wealthy look to tribe-up, a lack of ultrahigh-end inventory means they are also bidding up home values to new records. But why move to a place where your “highest-price-ever-paid” estate could get wiped off the planet by the next big one? Madeline Levine, a psychologist in San Francisco, says that when she asked that question of a fabulously wealthy client of hers, he thought the question was hilarious, then he said “Why not? We can take a hit.”
Blame “relative wealth.” One of the Malibu homes owned by Larry Ellison, co-founder of Oracle, burned down in the fires in January. Zillow had previously valued it at about $21.5 million. That is about 0.01% of his net worth of approximately $216 billion. Ellison didn’t respond to a request for comment.
For the lower-tier wealthy who would lose a much larger percentage of their net worth if their multimillion-dollar home burned to ashes, some delusion is required to move to high-risk areas, says Brad Klontz, a financial planner and psychologist in Boulder, Colo.
“These people look around and say ‘this looks like a dangerous place,’” says Klontz. “But everyone seems to be calm and smiling and happy and you think ‘yeah, I guess we’re safe. What are the odds it will happen here?’”
When delusion meets nature’s sledgehammer, the wealthy can afford to build houses that are more likely to survive. Cat-5 rated construction techniques, fireproof materials, private firefighting brigades, flood barriers, and homes raised above storm-surge levels are all ways that money buys protection from nature that most normies can’t afford.
In Malibu, however, the recent fires, which devastated not just homes but the infrastructure that makes a place a community, may have marked the beginning of the end of its time as an enclave for the super wealthy. “I think we’re at an inflection point,” says Pedraza. He says that his contacts and clients among the Malibu moneyed are, increasingly, over it, no matter how much money they have. “It is just too fast and too furious.”
By: Kris FrieswickI The Wall Street Journal I April 1, 2025