A recent study has found that nearly half (44.8%) of all US homes are threatened by extreme weather conditions brought on by the impacts of climate change. Roughly $22 trillion worth of residential properties are at risk of “severe or extreme damage” from flooding, high winds, wildfires, heat or poor air quality, according to a report from Realtor.com.
Such impacts will have an effect on home prices, will drive up insurance costs and even destabilize the broader housing market.
"These natural disasters can destroy homes and communities," Realtor.com said in its report. "Even properties that aren't directly affected by climate risks are being affected by higher insurance premiums—threatening potential sales and making homeownership increasingly more expensive."
This report follows one from last year in which an analysis from the non-profit First Street Foundation found that a growing risk of wildfire makes some real estate property in California essentially “uninsurable”. The analysis also found some US states that are more inland such as Kentucky, South Dakota and West Virginia are facing higher insurance costs due to an increase in extreme weather damage caused by climate change.
"You're talking about getting a letter in the mail that says somewhere between 60%, and as high as mid-80%, increases for policies," Matthew Eby, the CEO of First Street, said last year. "That is crippling. Absolutely crippling. And so those homes are not, from an investment scenario, something that you would invest in."
The report from Realtor used data from First Street to estimate the number of homes facing potential climate damage, and focused its study on the 100 largest cities.
Therefore, the report also found: 55% of homes, worth $3 trillion, face a severe or extreme risk from wildfires with more than a third (39%) of these properties in California. Nearly 7% of homes, worth $3.4 trillion are at a high risk of flooding and New Orleans holds the largest share of these homes. At least 9% of homes, worth $6.6 billion, face severe or extreme risks because of declining air quality.
The report also found that over the next 30 years, 18% of homes will be at risk of damage from hurricane-strength winds, and that homeowners in 19 states and Washington, DC are now being asked to carry additional hurricane-related policies.
A report from this past December released by First Street Foundation also found that about 3.2 million Americans moved due to an increasing risk of flooding. But at the same time, some of those areas also saw an increase in migration in the past two decades.
The insurance industry has previously said that the frequency and severity of claims are on the rise, and it is making those companies more aware of where they would prefer to offer coverage and will increase insurance premiums.
If an insurance company decides to drop a property, that home’s value could decline by 19% to 40%.
"The changes that we're already seeing over these past two decades are already beginning to impact almost every major sector of our society," Jay Banner, a climate scientist and director of the Environmental Science Institute at the University of Texas at Austin, said Wednesday.