Climate change is reshaping far more than just the environment.
Due to climate-related risks, U.S. real-estate values are expected to plunge by $1.5 trillion in the next 30 years, Quartz reported on Monday. That’s according to a new report from First Street, an organization that carries out climate risk financial modeling. It attributes the climate-related decline in property values to two factors in particular: insurance pressures and shifting consumer demand.
When it comes to insurance, premiums are rising as natural disasters become more common and more intense, First Street noted. In some high-risk areas, coverage has been taken away altogether. In those neighborhoods where insurance is available, costs are rising much faster than mortgage payments: From 2013 to 2022, for example, insurance as a percentage of mortgage payments doubled from 7 to 8 percent to more than 20 percent.
Some cities are more vulnerable to these shifts than others, as well, especially when you look at coastal metro areas. Miami has seen a 322 percent increase in insurance premiums, while other Florida cities have experienced the same—Jacksonville with a 226 percent bump and Tampa with a 213 percent rise. New Orleans (with a 196 percent increase) and Sacramento (with a 137 percent increase) round out the top five in that metric.
Historically, many have viewed the Sun Belt as an attractive place to settle down and buy a home. But that area of the United States is one of the most susceptible to climate risk, with Texas, Florida, and California making up more than 40 percent of the country’s $2.8 trillion in natural-disaster costs since 1980, according to First Street data. As such, people may be less interested in moving to those states and taking on the added risk of living in a natural-disaster zone. First Street believes that more than 55 million Americans will relocate to less vulnerable areas in the next three decades, with 5.2 million moving this year alone.
As the organization says in its report, these trends are resulting in a “feedback loop,” with people moving to avoid climate disasters, thus changing real-estate growth throughout the country and community development along with it. By 2055, First Street expects a whopping 70,026 neighborhoods to see some property value decline because of climate risk. Very few people—if any—seem to be truly immune to it.
Tori LathamTori Latham is a digital staff writer at Robb Report. She was previously a copy editor at The Atlantic, and has written for publications including The Cut and The Hollywood Reporter. When not…
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