Climate change isn’t just a future concern—it’s already reshaping how and where Americans live. In 2024 alone, the U.S. saw 27 separate billion-dollar weather disasters, nearly triple the yearly average from the 1980s. Homes are increasingly exposed to floods, fires, storms, and heat waves, forcing buyers, sellers, and communities to rethink the risks. These shifts aren’t temporary.
As insurance costs rise, mortgage approvals tighten, and some areas become harder to insure or even inhabit, climate risk is starting to rewrite the rules of real estate. In the years ahead, it could change not just home prices and policies, but the entire map of where people choose—or are able—to live.
Impact on Property Values and Home Prices
Climate change is challenging the old idea that home values always rise over time. Coastal and disaster-prone properties are at particular risk. A recent analysis projects an extraordinary reversal in housing fortunes, with up to $1.5 trillion in U.S. home values lost over the next 30 years due to climate-driven factors. That study – by the climate research group First Street – forecasts that by the mid-2050s, U.S. homes on average could be worth 6% less than they are today because of unmitigated climate risks.
Beachfront homes face rising seas and erosion. In high-risk coastal zones, home sales have already slowed as buyers grow wary of frequent flooding.
Early Signs of Market Shifts
Early signs of this shift are appearing in some vulnerable areas. In Miami-Dade County, Florida, home sales in high-risk flood zones dropped by about 7.6% during a recent period, even as sales climbed in safer areas. Coastal counties in the Carolinas that suffer frequent hurricane storm surges have also seen significant declines in home sales relative to nearby safer counties. These trends suggest that buyers are starting to rethink investing in properties that flood repeatedly.
Academic and government studies likewise warn that as seas rise, some expensive coastal homes could eventually become uninsurable and essentially unsellable, crashing to zero value. All of this points to a future where climate change puts a drag on home prices in at-risk regions.
Location Matters
Not all markets will be hurt equally. Location matters: one Zillow analysis found that U.S. homes worth $9.1 trillion are at high risk of wildfire, $7.0 trillion at risk of major flooding, and a stunning $17 trillion at risk of extreme wind damage. Coastal cities like Miami and New York each have well over $500 billion in real estate facing serious flood risk.
At the same time, some cities in safer zones could see relative gains (or at least avoid losses) as people seek out lower-risk places. Experts agree that climate change will redistribute real estate value, likely cooling growth in hazard-prone markets and boosting demand in more climate-resilient areas.
Insurance Costs Skyrocket in Risky Areas
Insurance is the canary in the coal mine for climate risk. Homeowners’ insurance premiums are rising fastest in the very places with the worst fires, floods, and storms. Across the country, average home insurance costs jumped 31% from 2019 to 2023, largely due to climate-related claims.
In high-risk zones, the increases are even steeper. If current trends continue, insurance premiums could climb another ~30% in the next 30 years on average – and in some hotspots like Miami, rates might quadruple. Insurance, once a minor line in the homeowner’s budget, is becoming a major expense that can rival a mortgage payment.
Insurers Retreat from Risk
Climate disasters have made insurers much more cautious. In California, after several years of record wildfires, 7 of the 12 biggest home insurers have cut back coverage in the state. Major companies have hiked rates, dropped high-risk customers, or even halted new policies in fire-prone areas. For example, Allstate received approval for a 34% rate increase in California, and State Farm announced it would stop renewing 72,000 homeowner policies there.
Florida’s hurricane-battered market tells a similar story: repeated storms drove many private insurers into bankruptcy or retreat, forcing homeowners into the pricey state-run insurance pool. Florida now has the highest average property insurance premium in the nation – around $11,000 per year – and roughly 1 in 5 Florida homeowners have no insurance at all because they can’t afford it. This trend of insurance retreating from risky areas raises serious concerns, because without insurance, mortgages are hard to get and owners are one disaster away from financial ruin.
Impact on Affordability
As insurance costs surge, they effectively reduce how much house a family can afford. Lenders calculate monthly payments including insurance and taxes (PITI), so higher premiums shrink buyers’ budgets. In some places, homeowners now pay more for insurance and property tax than for their mortgage principal and interest.
If this continues, fewer people will be able to buy homes in hazard-prone areas, softening demand and prices there. Buyers and real estate agents are adjusting: home shoppers increasingly ask about climate risks and insurance before making offers. In short, skyrocketing insurance costs are putting a chill on risky real estate, acting as a financial signal of where it’s safe (or not safe) to live.
Mortgage Lending and Financial Stability
The 30-year fixed mortgage – a pillar of the U.S. housing market – assumes a home will retain value for decades. Climate change is testing that assumption. Banks and mortgage companies are increasingly aware that a house prone to burning down or washing away might not be a sound investment.
If climate threats start to noticeably depress home values in a region, it could trigger a vicious cycle: falling prices scare away lenders, and without mortgages, the buyer pool shrinks, causing prices to fall further. In one nightmare scenario sketched by a Florida mayor, if coastal property values start dropping, banks might stop issuing 30-year mortgages in those areas, collapsing the market well before the sea has swallowed any homes.
Financial System Concerns
Mortgage giants Fannie Mae and Freddie Mac (which back most home loans) have acknowledged climate risk as a serious concern. Freddie Mac’s chief economist warned as far back as 2016 that rising seas could eventually leave some coastal homes uninsurable and “their value will plummet to zero”, posing huge losses to homeowners and lenders.
Banks are now stress-testing their loan portfolios for flood and fire scenarios. Regulators have also flagged that climate change threatens the stability of the mortgage market and broader financial system if not managed. For instance, a concentration of mortgage defaults in hurricane zones or the sudden devaluation of thousands of houses in a floodplain could ripple through the economy.
New Lending Practices
In practical terms, lenders might respond by charging higher interest rates or requiring bigger down payments in high-risk locations to offset future danger. They may also limit 30-year loans in areas projected to be unlivable in 30 years, opting for shorter-term loans.
Federal flood insurance reform (Risk Rating 2.0) is already making mortgages more expensive in floodplains by raising insurance premiums to reflect true risk. If private insurers continue retreating, we could see uninsurable homes that become effectively unmortgageable. This would force those sales to cash buyers only, drastically shrinking the market.
All of these finance pressures mean that climate change is injecting new risk into the once-stable equation of homeownership. Houses have long been viewed as a rock-solid asset; going forward, that may no longer hold true in America’s most climate-vulnerable locales.
Americans on the Move: Climate Migration Patterns
One of the clearest signs of climate change’s impact will be where people choose to live. As conditions worsen in some areas, more Americans are expected to relocate in search of safer ground. In fact, researchers project that more than 55 million Americans could move because of climate risks by 2055, turning climate migration into a major demographic trend. Even now, about 5 million people per year in the U.S. migrate due partly to climate-related factors like extreme weather and disasters.
Current Migration Paradox
Paradoxically, current migration trends haven’t yet caught up to the climate science – at least not fully. In recent years, a lot of Americans have been moving into high-risk places, not away from them. For example, Texas and Florida – states with severe wildfire and flood risks – have been among the top destinations for movers.
In 2023, counties with the highest wildfire risk still saw a net inflow of about 63,000 people, largely due to people moving into fire-prone areas of Texas. The same year, the most flood-prone counties had a net gain of around 16,000 residents, mostly into Florida’s coastal counties.
Many people are drawn by affordable housing, job opportunities, low taxes, or a warm climate, seemingly outweighing concerns about natural hazards. Sunshine and cheaper homes have lured families to places like Cape Coral, FL or Phoenix, AZ despite those areas being at high risk of hurricanes or extreme heat.
Growing Risk Awareness
However, there are signs this pattern is starting to turn. Recent data indicate that Americans are becoming more aware of climate dangers and factoring them into moves. In California, which has suffered brutal wildfire seasons, high-fire-risk counties saw more people leave than move in during 2023 – a reversal from the year before. Likewise in Florida, migration into the most flood-prone areas has slowed compared to previous years.
And in a national survey, 62% of prospective homebuyers said they were hesitant to relocate to areas with severe climate risk, such as those with frequent disasters or rising sea levels. Interestingly, younger and wealthier people showed the most concern about climate when choosing where to live.
This growing risk awareness, especially after each big wildfire or hurricane, suggests that climate migration may soon accelerate away from high-risk regions. Over time, we may see a tipping point where population growth in the Gulf Coast or fire-prone West turns into population loss, as people decide it’s just not worth the danger or cost.
Regional Winners and Losers: Where Will People Go?
As climate migration unfolds, some regions of the U.S. are poised to gain residents, while others are likely to lose them. Broadly speaking, regions expected to “lose” population include low-lying coastal areas, the hurricane-exposed Southeast, and the drought- and fire-prone Southwest. Regions that might “win” (gain people) include parts of the North and Midwest with milder climates and abundant water.
Likely Losers – Coastal and Hotter Regions
Places at highest risk – such as Florida’s coastal counties, the Gulf Coast of Louisiana and Texas, and wildfire zones of California – are in the crosshairs. Sea-level rise is a slow-moving threat to U.S. coasts. Federal agencies like NOAA project that sea levels in South Florida could rise up to 3 feet by 2060 under high-emission scenarios.
Such an increase would flood neighborhoods and permanently inundate some land. A study by Zillow found roughly 934,000 existing homes in Florida, worth over $400 billion, could be chronically flooded by century’s end if seas continue to rise unchecked. With projections like these, it’s clear that parts of coastal Florida face an eventual exodus – even if today they are still growing.
The American West is grappling with intense wildfires and water shortages, which could deter future growth. Vast areas of California, Oregon, and the Mountain West have endured megafires in recent years, making some rural and suburban areas dangerous nearly every summer.
Meanwhile, the Desert Southwest (Arizona, Nevada) is coping with extreme heat and dwindling water resources. In 2023, Arizona’s government announced it would halt new housing construction in parts of the Phoenix area because there isn’t enough groundwater to support more development. This was a startling acknowledgment that water scarcity can put a hard stop to growth in one of the nation’s fastest-growing metros.
Potential Winners – The “Climate Havens”
On the flip side, safer regions with more temperate climates could see an influx of people seeking refuge from extreme weather. Many experts point to the Upper Midwest and Great Lakes region as a potential climate winner. This area has no hurricanes, very low wildfire risk, and a huge share of the world’s fresh water in the Great Lakes.
Cities like Detroit, Cleveland, Buffalo, Milwaukee, and Duluth have lots of room (after decades of population decline) and could accommodate growth. They also have a cooler climate that may remain moderate even as the planet warms (though they will get warmer and wetter, the risks are comparatively lower).
Urban planners have dubbed some of these cities “climate havens.” For example, Michigan is actively marketing itself as a haven with a “stable climate and ample water resources” to attract new residents and businesses. Population models indeed suggest that millions of Americans may eventually move north toward the Great Lakes and Northeast as the South and West become more inhospitable.
Other potential gainers include parts of New England (which, aside from some coastal flooding, will avoid the worst heat and has abundant water) and mid-Atlantic inland cities. Mountainous regions that are high enough to stay cool and avoid wildfire (parts of Appalachia, for instance) might also see growth.
It’s important to note that a region being a “winner” in relative terms doesn’t mean it has zero climate problems – only that it has fewer than other places. The Great Lakes, for instance, will still face heavier rainstorms and occasional heat waves. But on the whole, the nation’s economic center of gravity could gradually shift toward the north and interior. This could revitalize some Rust Belt cities with new residents and investment.
A New Era for Real Estate
In sum, climate change is poised to permanently alter U.S. residential real estate markets in multiple ways. Property values in high-risk areas may stagnate or fall, even as values in safer regions climb. Home insurance – once taken for granted – is becoming expensive or unavailable in some locales, forcing homeowners to reconsider where they live and what they can afford.
The mortgage industry is bracing for the ripple effects, with the potential for a climate-driven housing finance squeeze if too many homes become uninsurable. And underpinning all of this is the quiet movement of people: gradually, more Americans are relocating to places with lower climate risks, which will create clear regional winners and losers in housing demand.
Adapting to a New Reality
These changes are not a temporary blip; they represent a new era. Every future forecast by scientists and economists suggests that the trends we’re starting to see – higher costs in disaster zones, shifting populations, and the repricing of risk – will only intensify in the coming decades.
Homeowners, buyers, and policymakers will need to adapt to this reality. That might mean fortifying homes against hazards, rethinking where to build new housing, or even deciding when to retreat from certain areas. Real estate has always been about “location, location, location,” and climate change is rewriting what the best location means. In the long run, the resilience and safety of a location may matter as much as its scenery or job market.
Practical Takeaways
For homeowners and home seekers, the takeaway is this: climate risks are becoming key factors in the housing market’s future. If you own a home, it’s wise to understand your property’s exposure to floods, fires, or storms, and consider mitigation (or future resale implications). If you’re looking to move, it might pay to research how a region is preparing for climate impacts.
Communities that invest in resilience (like stronger building codes, flood defenses, and wildfire management) could better protect home values. Those that ignore the risks might see rougher adjustments.
What’s certain is that climate change is here to stay, and it will leave a lasting imprint on American housing. The market is beginning to price in the realities of a warming world. In the coming decades, the map of U.S. real estate will be redrawn by climate resilience. Some neighborhoods will thrive on higher ground, while others closer to the waterline or forest edge may empty out. These shifts, once fully realized, will be permanent.
References
- National Association of Realtors – What Climate Change Means for Your Buyers
- ProPublica – How Climate Change Could Upend the American Dream
- Architectural Digest – How Climate Change Affects Your Home Value
- PLEA Network – People Stress
- Zillow Research – Trillions in U.S. Home Value Face Major Risk from Fire, Flood and Wind
- The Atlantic – America’s Climate Boomtowns Are Waiting
- WUSF – Florida homeowners join rising trend, opting out of property insurance
- Business CCH – Letter to Freddie Mac on Climate Risk
- Redfin – More People Are Moving In Than Out of Fire- and Flood-Prone America
- Redfin – 62% of Homebuyers, Sellers Hesitant to Move to Area With Climate Risk
- Council of the Great Lakes Region – WEBINAR: Climate Migration – Is the Great Lakes Region a Climate Haven?
- Arizona Technology Council – How climate change is causing housing market chaos
