Home Values To Plunge in ‘Climate Abandonment’ Zones—Here’s Where To Buy Instead

As the property risks associated with extreme weather and climate disasters continue to rise, certain areas are projected to suffer steep losses in home values, while others benefit from their resilient locations.

These “climate abandonment” zones, which are expected to experience rising home insurance premiums and declining populations, will see an average property value decline of 6.2% through 2055, according to projections from analytics firm First Street.

California’s Fresno County is expected to take the biggest hit, with projected home value losses of 10.4% over the next 30 years, according to the report. First Street projects Fresno County’s population will decline 46% over that period, while insurance premiums rise 56%.

Other top climate abandonment zones by projected population loss include Ocean County, NJ (-33%); Monmouth County, NJ (-32%); Sacramento County, CA (-28%); and Jefferson County, AL (-26%).

“These are areas that are significantly impacted by climate risk and have a statistical relationship between that climate risk and negative population change. So we’re actually seeing population loss in these areas,” says Jeremy Porter, head of climate implications research for First Street.

Overall, First Street projects that about 21,750 neighborhoods, making up 26% of all census tracts, will experience premium spikes and associated population decline through 2055.

In aggregate, the firm projects the population of these areas to drop by 38% over the next 30 years.

The ‘climate-resilient’ zones that are expected to thrive

On the other end of the spectrum are the “climate-resilient” zones, which are expected to see population growth and minimal insurance premium increases in the coming years.

This category is much smaller, comprising just 4,107 neighborhoods, or about 5% of all census tracts.

But these areas are expected to see strong home price appreciation averaging 10.8% through 2055, due to stable insurance rates and strong demand from aggregate population growth of 68%.

Dane County, WI, the home of state capital Madison, leads in this category, with projected property value appreciation of 13.5%.

Other examples of resilient areas named in the report include Denver County, CO; Arapahoe County, CO; Douglas County, NE; and Johnson County, KS.

“For climate-resilient areas, [we expect] really positive impacts from growing population, relatively minor impact from increasing insurance,” says Porter. “Where we don’t expect to see a tremendous impact from climate, at least, on insurance costs into the future in these communities.”

‘Risky-growth’ areas will continue to expand

First Street expects that much of the country will continue to see population growth despite rising insurance premiums due to higher climate risks.

These “risky growth” areas make up 33% of the country, the largest category tracked in the report. In aggregate, population is projected to rise the fastest in these areas, jumping 76% by 2055.

Higher demand will act to boost home values in these areas, but not enough to compensate for the drag on valuations from higher insurance rates, according to the analysis.

First Street projects that, in the aggregate, home values will decline by 1.7% in risky-growth areas through 2055, although some areas could see home price growth while others see declines.

“Ultimately, what we ended up seeing was that the risky-growth areas are actually projected to grow faster than any other group,” says Porter.

“These are the areas we know have a lot of climate risk, but the economic, the social, the political character of the communities, the amenities in the communities, are still pulling people into those areas.”

Ranked by projected population growth, the top five risky-growth areas identified by First Street are all in Texas: Fort Bend County, Denton County, Williamson County, Travis County, and Montgomery County.

Total loss of property value projected to reach $1.47 trillion

Nationally, First Street projects that growing risks triggered by climate change will erase $1.47 trillion in U.S. home values over the next 30 years.

That’s about 3% of the current total value of all U.S. residential properties, and it represents projected net property value losses due to insurance pressures and shifting consumer demand.

“There are going to be communities where it’s a much larger impact on their property values, and there’s going to be places that are going to see significant increases [in home values],” says Porter.

“So I think it’s worth pointing out that all of this starts at the property level, and there’s a lot of variation that we’re hiding when we look just at the national numbers,” he adds.

First Street’s risk assessments are available at the property level on Realtor.com® home listings under the “environmental risk” heading.

Environmental risks can also be visualized using the dynamic map layer on individual listing pages.