Climate Risk Threatens $11.2 Trillion in Housing Wealth, but Rising Costs Are Forcing Homeowners To Drop Coverage

Nearly 1 in 4 homes in America faces climate risk as wind, floods, and wildfires take their toll, according to new Realtor.com® analysis.

In total, $11.2 trillion in residential real estate is exposed to at least one type of severe or extreme weather disaster risk, including storms and wildfires. And homeowners are already footing the bill.

Climate-related disasters have already had broad effects nationwide. That includes the Eaton and Palisades wildfires in California last year, which caused total property and capital losses ranging between $76 billion and $131 billion.

It also includes more risk in flood zones across the country, as seen recently in Texas. And Tornado Alley is shifting eastward, putting new areas at risk.

Homeowners in these high-risk areas already face higher HOA fees and insurance premiums. But increasingly, soaring premiums are forcing some homeowners to drop insurance, exposing them to potential financial ruin in a disaster.

"Earlier climate risk disclosure is the most direct path to ensuring buyers decide with eyes open—not years later when the costs become impossible to ignore," states the report.

The median monthly HOA fees for homes facing severe or extreme climate risks are $192, which is $67 or 53.6% higher than homes in less risky areas.

And homeowners in climate-exposed states are carrying higher mortgage delinquency rates. Louisiana and Mississippi hit 1.7% and 1.4%, respectively, in September 2025, compared to the national average of 0.8%. Texas and Florida also see the same problems.

Support system erosion

The traditional safety net is thinning. The National Flood Insurance Program, a federal program that writes more than 90% of flood policies for homeowners, is becoming more expensive. Premiums are going up while the number of NFIP contracts in force has declined by almost 170,000 from May 2025 to May 2026.

The largest year-over-year drops are coming from disaster-prone states, including Texas, which dropped 7.8%, and Oklahoma, which dropped 6.9%. Idaho, Mississippi, and Alabama also recorded drops over 6.5%.

Climate change is often a politically charged issue in Washington, DC. But lawmakers have nonetheless considered the impacts of major disasters on homeowners, including floods.

At a March hearing, lawmakers said the high cost of flooding has drained billions from the NFIP. Lawmakers blamed severe, expensive hurricanes, for instance, that hit certain areas of the country over and over again.

Several bills put forth this year aimed to reform home insurance rules. With one bill, lawmakers are interested in easing regulatory approvals to restore degraded flood plains. But Congress has also pitched prohibiting flood insurance coverage for severe, repeat-loss properties.

Rep. Ayanna Pressley (D-MA) said at the hearing that insurers often refused to write policies for low-income and marginalized communities in areas that are most at risk from climate-related disasters.

"We need more support for these communities, not less," Pressley said. "Private insurers have increasingly withdrawn from the very communities that need coverage the most due to the escalating cost of climate disasters."

Homebuyers continue to be drawn to high-risk areas

Still, buyers are shopping in high-risk markets. The Realtor.com analysis looked at California, for instance, where the wildfires destroyed tens of thousands of homes.

It took only a month for online homebuyer views of homes in severe- and extreme-risk areas to rebound to where they were before the fires. A month later, the traffic increased.

"This fast rebound suggests that affordability pressure in expensive markets is too strong to be displaced by risk awareness, even in the immediate aftermath of the most destructive urban wildfire in modern American history," the report states.

For that reason, climate risk disclosure for prospective buyers is the best step, states the report. That's because these potential costs don't disappear just because someone doesn't know about them. And oftentimes, knowing about the risks now could stave off potential for disaster down the road.

Meanwhile, a group of experts the Urban Institute convened this week said that community development groups and affordable housing advocates need to take a more proactive role in informing homeowners and helping them deter the impacts from climate change and the disasters it can bring.

A recent survey of 450 community and economic development leaders found that most acknowledge climate change effects on neighborhoods. But many groups lack the resources to help and inform homeowners.

"Climate is here, it's impacting us on a day-to-day basis," said Andrew Rumbach, who co-leads Urban Institute's climate practice area. "The opportunities of climate and the threats of climate are not shared equally."