#United States #Austin #Realtor.com #climate risk #U.S. Homes

Over $12 Trillion in U.S. Homes Exposed to Severe Climate Risks

A recent study by Realtor.com® has brought to light a pressing issue: more than a quarter of the homes across the United States, equating to an astonishing $12.7 trillion in real estate value, are vulnerable to significant climate risks. This analysis, released on September 3, 2025, underscores the increasing threats posed by flooding, hurricanes, and wildfires, which are substantially reshaping the landscape of homeownership, market dynamics, and insurance costs.

"Climate risks are transforming from abstract concerns into tangible threats for the U.S. housing market, drastically affecting property values," stated Danielle Hale, Chief Economist at Realtor.com®. She emphasizes that the discrepancies between perceived and actual climate-related risks remain particularly notable in various markets, especially concerning flooding. This growing gap necessitates the availability of accurate data, enabling current and potential homeowners to make informed decisions regarding their investments.

Underestimating Flood Risk

Flooding is identified as one of the most underestimated risks in real estate. According to First Street's Flood Factor score data, nearly 6 million homes valued at $3.4 trillion are forecasted to face severe or extreme flooding over the next three decades. Alarmingly, this figure surpasses the number of properties included in FEMA's Special Flood Hazard Areas (SFHAs) by approximately 2 million, spotlighting the inadequacies of FEMA's mapping efforts which fail to fully account for severe rainfalls and the repercussions of climate change.

In major metropolitan regions, cities like New York, Los Angeles, and San Francisco are particularly affected, each exhibiting staggering discrepancies in dollar values between properties within FEMA-designated areas and those experiencing heightened flooding risks. Notably, New Orleans leads with 66 percent of its housing stock facing severe flood risk without FEMA acknowledgment, setting a concerning precedent for homeowners.

Winds of Change: Hurricane Threats

Moving beyond flooding, wind-related risks are similarly alarming. Roughly 18.3% of American homes, valued at nearly $8.0 trillion, are placed under severe or extreme risks from wind damage, with areas in Louisiana, Florida, and southern Texas being particularly vulnerable. By 2025, cities like Miami and Houston show that nearly every home is subjected to these threats, compounded by overlapping flood exposure. As storm-related costs escalate, homeowners often face daunting deductibles, sometimes being required to cover thousands before any insurance payouts.

The Rising Threat of Wildfires

While still geographically concentrated, the threat of wildfires is rapidly intensifying. Approximately 5.6 percent of homes, accounting for $3.2 trillion in value, confront severe wildfire risks, with California bearing the heaviest burden. The state itself represents nearly 40% of this total, positioning it at the forefront of wildfire exposure. The average annual premiums for homeowners in areas like Los Angeles and Riverside are becoming untenable, leading many to seek alternative coverage options that are often prohibitively expensive.

Escalating Insurance Costs

As climate-related risks mount, so too do insurance costs, placing an additional financial strain on homeowners. In Miami, for instance, average annual insurance premiums under a standard HO-3 policy can reach an eye-watering 3.7 percent of a home's market value—the highest across the nation. Similar trends are evident in New Orleans and Cape Coral, Florida where rates continue to soar.

This tide of increasing costs combines with insufficient coverage options for disasters like floods and wildfires, as most homeowners find they must navigate complex policies that do not provide adequate protection against climate-related damages.

"Homebuyers typically prioritize budgets against prevailing home prices and mortgage rates, often overlooking climate risks and insurance implications, yet these factors are crucially shaping housing costs and affordability," stated Hale. The realities of property risks across different regions—ranging from flooding in the Northeast to wildfires in the West—underscore a widening national crisis that demands immediate attention.

In summary, Realtor.com®'s recent findings serve as a significant wake-up call about the profound implications of climate risks on housing values. Understanding these evolving dynamics is essential for homeowners, buyers, and the broader market, urging all to take informed steps in the face of escalating climate challenges.