Arnaud Brohé, PhD, the founder & CEO of Agendi, signals the increasing risks of climate change in the US real estate market. If left unaddressed, these risks carry significant economic and social consequences, endangering the wellbeing of families and communities across the country.

I’ve spent years analyzing the intersection of climate change and its impacts on various sectors across markets. One thing is clear: the risks to the US real estate market from climate change are real, material, and already undermining the economic foundation many Americans depend on. Despite political denial, the US housing market, particularly in areas vulnerable to climate disasters, is facing crisis. Home insurance, crucial for securing mortgages, is becoming unaffordable, setting the stage for a broader economic disruption.

Climate change and the home insurance crisis

In 2021, the Biden administration tasked the US Treasury Department to assess the climate risks to home insurance. Their findings were stark: climate change is making home insurance more expensive and harder to obtain.

This is a critical issue that we’ve been highlighting for years with our financial and real estate clients. Without insurance, banks won’t issue mortgages. As insurers pull back from those geographic areas most at risk, home values in disaster-prone regions will likely plummet, threatening a potential economic downturn.

Political back-and-forth only complicates the situation. Just days after the US Treasury Department’s report was issued, President Donald Trump revoked the executive order that would have required annual assessments of climate risks in the real estate sector. Back-and-forth actions between administrations are frustrating, to say the least. These policies — ranging from flood risk regulations to federal divestment in high-risk zones — are critical for long-term planning and mitigation.

Rising insurance costs and the domino effect

One immediate effect of climate change is the sharp increase in real estate insurance premiums. Since 2019, US premiums have risen 31%, with much higher increases in vulnerable areas. In Miami, insurance rates could quadruple, while Sacramento could see a doubling. These rates now outpace inflation, and owning US property is no longer the stable investment it once was.

Insurers in the US have long underpriced climate risks, especially in coastal and fire-prone zones, allowing people to live in increasingly unsafe areas. As insurers adjust rates to reflect those risks, the economic consequences are becoming clear.

The socioeconomic implications of a changing housing market: climate migration

Real estate represents nearly $50 trillion of wealth in the US — almost double the country’s GDP. Climate risks are already causing ripple effects. As insurance premiums rise and insurers pull out of high-risk areas, property values could decline, forcing families out and triggering significant economic damage.

According to First Street’s research, over 55 million Americans may migrate within the next 30 years due to climate risks. As people flee high-risk areas like parts of Florida, California and Texas, safer regions may see rising property values while disaster-prone areas experience declines, creating an even greater divide between climate “haves” and “have-nots.”

Without addressing climate risks, we are on the verge of an economic downturn and increasing wealth disparity. Homeownership, once the cornerstone of the American economy, is at risk. If home values drop due to rising insurance costs and climate disasters, the wealth of millions will be wiped out, leading to financial instability.



Opportunities amidst risks

However, amidst these challenges, there are opportunities. By focusing on climate resilience, the building sector can create value through sustainable construction practices, adaptation measures, and energy-efficient retrofits. Builders and investors who act proactively to mitigate climate risks can benefit from rising demand for safer, energy-efficient homes. Local regulatory policy such as New York City's Local Law 97 is a step in the right direction: driving energy efficiency and resilience, which ultimately provide financial opportunities for those adapting early.

Climate change is fundamentally altering the real estate market across the United States. Rising insurance premiums, declining home values, and shifting migration patterns are already impacting the American population. Political denial doesn’t change the facts — the economic consequences are unfolding now. To adapt and mitigate the fallout, action is necessary at the policy level and within the real estate and financial sectors.