Extreme weather events caused by climate change — should they continue — will cause the United States to lose nearly $1.5 trillion in real estate value over the next 30 years.
That's the major takeaway from a study released Monday by First Street Foundation, a New York think tank that studies financial risk related to climate change. First Street researchers drew their prediction after estimating that 70,026 U.S. neighborhoods will have encountered some form of climate change-related event and property values in those areas will subsequently drop.
"Residential real estate in the United States stands at a historic turning point," the report concluded. "For generations, homeownership has served as both the bedrock of household wealth and a driving force in the national economy. However, climate change is fundamentally reshaping this landscape. The combination of increasing natural disasters, chronic environmental stressors and rising insurance costs is creating new patterns of migration and housing costs that will redraw
the map of valuable real estate across America."
The First Street report lands at a time when residents across Southern California are the latest to experience how extreme weather is impacting the housing market. The Palisades and Eaton fires have scorched almost 40,000 acres of land, causing $29.7 billion worth of damage to single-family homes. In a separate report, First Street predicted annual wildfire damage in California will increase from roughly $14 billion in 2023 to almost $24 billion by 2053.
To be sure, parts of North Carolina, Virginia, Texas, Florida, Louisiana, Oklahoma and New York have also seen homes damaged from tornadoes, floods, hurricanes and blizzards. The U.S. National Oceanic and Atmospheric Administration said it believes climate change-related disasters, and their impact, will continue.
“Climate change is no longer a theoretical concern; it is a measurable force reshaping real estate markets and regional economies across the United States,” Jeremy Porter, First Street's head of climate implications, said in a statement. "Our findings highlight the urgent need to understand how rising insurance costs and population movements are transforming the economic geography of the nation.”
Higher insurance costs
Homeowners should expect their insurance policies to be more expensive by 2055, the First Street report said. Premiums will increase by an average of 29.4 percent, First Street said, with homeowners in California, Florida and Texas taking the highest of increases. At the city level, homeowners in the coastal communities of Miami, Jacksonville and Tampa in Florida; New Orleans; and California's Sacramento stand to see the highest insurance policies increases, the report said.
Homeowners insurance rates grew 9.7 percent during the first nine months of 2024, according to the most recent data available from S&P Global Market Intelligence.
Over the next 30 years, intense weather events will cause about 55 million Americans to move more inland to avoid wildfire smoke and flooding, the report added. A good chunk of those migrants will relocate to North Dakota and Montana because those state are less populated and do not have as many extreme weather events, according to the report.
First Street CEO Matthew Eby said in a statement there's perhaps one silver lining to the report's predictions — there's still time to reduce climate change's impact.
“These results highlight not only the pressing challenges but also the opportunities for adaptation and innovation in the face of climate change,” Eby said. “Policymakers, businesses and communities must act now to mitigate risks and capitalize on the emerging economic opportunities in a shifting landscape."