Climate Risk: A $22 Trillion Problem for the Housing Market

Climate risk is a $22 trillion problem for the housing market and it’s only getting worse. A recent report from Realtor.com revealed that nearly 45% of homes in the U.S. are facing severe or extreme climate risks, including flooding, wildfires, heat, wind, and air quality issues. This represents almost $22 trillion in housing wealth that is at risk.

The report also highlighted that 40% of homes, valued at $19.7 trillion, are at risk of heat, wind, and air quality issues. Miami was identified as one of the cities most at risk, along with other areas in Florida, Texas, South Carolina, Louisiana, and Virginia.

Heat risk was identified as the most significant threat, affecting over 32% of homes across the country, valued at nearly $13.6 trillion. Miami once again led the way in terms of the total value of homes at severe or extreme heat risk.

In addition to heat risk, wind (hurricane), air quality, flood, and wildfire risks were also identified as major threats to the housing market. Wind risk affects 18% of homes, air quality impacts 9% of homes, flood risk affects 6.6% of homes, and wildfire risk impacts 5.5% of homes.

The consequences of these climate risks go beyond the potential destruction of homes and property. Rising insurance costs and limited access to affordable insurance are also major concerns. Last year alone, extreme weather events cost the country at least $23 billion, leading to insurance companies capping policies and even pulling out of certain regions altogether.

With climate change expected to increase the frequency and severity of major weather events, the housing market is facing significant challenges. The recent report serves as a stark reminder of the urgent need for action to address climate risks and protect homeowners from potential financial and personal losses.