Home values expected to fall by trillions as climate change wreaks havoc

Home values expected to fall by trillions as climate change drives up insurance rates, prompts migration

What you probably already know: Home prices could decline in the U.S. by $1.47 trillion in the next 30 years due to climate change. That’s according to a new report out Monday from First Street, a research firm that studies climate change and financial risk. As areas across the country experience severe weather, including wildfires, flooding and extreme hurricanes, climate risks are becoming a serious financial issue. Insurance markets have responded by pulling out of markets entirely, making home ownership impossible for many Americans.

Why? Insurance as a percentage of mortgage rates has risen from around 7% to 20% since 2013, and it’s much higher in some regions. In Miami, insurance premiums have gone up by 322%, in Jacksonville, up by 226% and Sacramento is up by 137%. The popular warm-weather states of California, Texas and Florida have had 40% of the country’s $2.8 trillion in natural disaster costs since 1980, according to the report. That has many people leaving those states in search of more temperate climates. California experienced the highest percentage of outbound movers in 2024 and Idaho experienced the highest level of inbound movers.

What it means: For the first time, migration patterns in the U.S. are as tied to economic opportunity as they are to climate impacts, something the report calls a “tipping point” for the country. An estimated 84% of all census tracts will experience some negative property value impacts from climate risk by 2055 due to shifting consumer demand and insurance pressure.

What happens now? Insurance companies have dropped 1.9 million homeowners policies since 2018 and non-renewal rates have tripled in 200 counties, according to a Congressional study. Losses are now regularly hitting $100 billion a year, and the fires in Los Angeles are likely to make 2025 a record-breaking year. And it’s not just the Sun Belt states that are getting hit hard. The First Street study suggests people will leave Fresno County, California, but also Ocean County and Monmouth County, New Jersey.