A storm brings immediate devastation—damaged homes, power outages, and lost lives—but its long-term impact often stretches years into the future. Beyond cleanup and rebuilding, many homeowners face climate risk in terms of rising insurance costs, diminished property values, and unaffordable living conditions.
Climate risk is now a defining force in the U.S. housing market. It’s not just a matter of weather—it’s a financial, economic, and insurance crisis unfolding in real time.
Climate Risks Are Widespread
Global property data firm Cotality estimates that more than 33 million U.S. homes are at risk of hurricane wind damage this year, with a combined $12 trillion in reconstruction value. Additionally, more than 6.4 million homes, worth $2.2 trillion, face moderate or greater flood risk.
This risk is growing—and costly. According to the State of the Nation’s Housing 2025 report by Harvard’s Joint Center for Housing Studies, 20.3 million homeowners (24%) were cost-burdened in 2023. A key driver are rising property insurance premiums, which increased 57% from 2019 to 2024.
In high-risk states such as California, Florida, and Louisiana, homeowners are already grappling with unaffordable insurance, reduced coverage, or losing coverage altogether.
Foreclosures Are Rising
The financial toll of climate events extends beyond insurance. It’s reshaping credit risk and destabilizing lending models.
According to a report by First Street Foundation, Climate, the Sixth ‘C’ of Credit, the impact of Hurricane Sandy provides a real world example. Home prices in affected areas dropped 14% annually for five years, destroying home equity and causing foreclosures to go up.
These property-level losses rippled through the financial system, resulting in $68 million in unpaid principal and interest. Under a standard 50% loss-given-default assumption, this translated to $34 million in credit losses—losses not captured by traditional credit risk models.
Recognizing this gap, First Street proposes a sixth “C” in credit assessment: climate, which would exist beside the five traditional credit metrics, character, capacity, capital, collateral, and conditions.
The future is troubling. First Street projects that credit losses due to climate risk could rise from $1.2 billion in 2025 to $5.4 billion by 2035. By then, climate-related foreclosures could account for 30% of all foreclosure activity—up from 6.7% in 2025.
Climate Risk Shrinks The Buyer Pool
Climate events are upending the insurance market. Insurers are pulling out of high-risk areas or raising rates dramatically. Every 1 percentage point increase in annual insurance premiums is associated with a 1.05 percentage point rise in foreclosure rates, according to Kin Insurance.
A recent Kin survey found that 72% of homeowners consider insurance unaffordable. Without adequate insurance, homeowners can’t qualify for a mortgage—shrinking the buyer pool and pushing more families out of reach of homeownership, especially in coastal areas.
Forecasting storm severity is becoming more difficult. NOAA predicts a 60% chance of an above-average hurricane season in 2025 with up to 19 named storms. Yet actual outcomes have repeatedly gone way above forecasts. Kin estimates that NOAA’s models may be underestimating severity by up to 90%.
Climate Risk Destroying Home Values
Hurricane risk is already altering housing demand, even in traditionally stable markets.
According to Cotality, more than 656,000 homes in Charleston, S.C., Wilmington, N.C., and Virginia Beach, Va., are vulnerable to storm surge if a hurricane makes landfall. Home sales are slowing—properties in Virginia Beach stayed on the market 32% longer in 2025 compared with early 2024, while homes in Wilmington lingered 19% longer.
“Buyers are factoring environmental risks into decisions in ways we haven’t seen before,” said Selma Hepp, chief economist at Cotality in a press release. “They’re pricing in insurance premiums, future storms, and resale challenges. That’s reshaping demand in coastal markets—even where past storm activity has been minimal.”
Home values are also dropping. Properties in Miami’s 100-year flood zone have declined by up to 18% per square foot. But any savings are often wiped out by skyrocketing insurance costs—if coverage is even available.
In states like Florida and Texas, several insurers have exited the market or gone bankrupt, forcing state-backed insurers to step in. Premiums are also climbing in Virginia and South Carolina, straining affordability.
The Case for Affordable Mitigation
Mitigation doesn’t have to be expensive. Hurricane risks, particularly wind, have the biggest impact a home’s roof. According to Kin’s Chief Insurance Officer Angel Conlin, simple upgrades like roof clips and secondary water barriers can make a significant difference.
“It costs less than $1,500 to add clips that hold down the roof—and Kin offers credits that help homeowners recover the cost in the first year,” she said.
Kin also conducts follow-up inspections after underwriting to recommend safety improvements that lower risk and insurance costs.
Design To Defend Against Climate Risk
Architects and builders can help mitigate risks through smarter design. Features like hip roofs, “peel and stick” underlayment, and reinforced garage doors improve storm resilience. Metal roofs last longer and are more wind-resistant—though they carry a higher upfront cost.
“Shingle roofs in Florida rarely last their full lifespan,” said Conlin. “Most carriers won’t write a shingle roof over 10 years old.”
Other best practices include removing overhanging trees, elevating electrical systems, and incorporating backup power through generators or solar.
Many home builders are creating home designs with panel or modular solutions that can withstand the strongest storm conditions, and even delivering them at an affordable price point offsetting the rising insurance premiums.
A Financial System Under Pressure
Flooded homes have a 40% higher foreclosure rate than their neighbors. And in a broader economic downturn, these risks compound—lowering home values, weakening financial institutions, and destabilizing the mortgage system.
After Hurricane Sandy, banks underestimated foreclosures by nearly 400 cases due to ignoring flood risk. The result was $68 million in unpaid principal, and $34 million in credit losses. Response measures can be helpful, but also carry long-term costs for lenders.
First Street’s model shows that, without major changes to lending criteria and mitigation efforts, climate risk will continue to drive foreclosures through rising premiums, slow price growth, and more frequent disasters.
Climate Risk Demands Solutions
The risks tied to climate events are not just environmental—they are deeply economic and structural. From soaring insurance costs to rising foreclosures, the climate crisis is pushing the U.S. housing system to a tipping point.
More real estate data companies are tracking the impacts and making them visible, which also is showing certain markets at higher risk than others, and inspiring the need for updated building codes as a viable solution.
Climate risk solutions are available, but require action: smarter construction, insurance reform, updated lending models, and proactive mitigation. Without these changes, more Americans will find themselves priced out, uninsured, or underwater—both financially and literally.
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