Recent findings indicate that over a quarter of U.S. homes, valued at approximately $12.7 trillion, are subject to “severe or extreme climate risk,” according to an analysis from Realtor.com.
The report examines risks from wildfires, flooding, and wind damage, which have all reflected in heightened concerns following recent disasters.
“These challenges not only impact the safety of homes, but also influence property values, insurance costs, and overall market stability,” noted Jiayi Xu, an economist with Realtor.com.
Around 18% of homes are vulnerable to hurricane wind damage, while 6% face threats from flooding and the same percentage from wildfires.
The analysis revealed that the highest-risk areas are mostly located in the South, where homeowners contend with the steepest insurance costs relative to home values.
In fact, Miami ranks as the city with the highest homeowner insurance burden among the 100 largest U.S. metropolitan areas, with annual premiums making up 3.7% of property value, a stark contrast to the national average of just 0.8%.
Florida stands out with five metropolitan areas appearing in the top ten for insurance burden, more than any other state. New Orleans and Baton Rouge in Louisiana also score highly on this list.
The growing population in high-risk coastal communities continues to expose more individuals and properties to catastrophic events, which, as noted by Mark Friedlander, senior director of media relations at the Insurance Information Institute, will lead to escalating insurance costs.
The National Weather Service forecasts between 13 to 18 named storms this year, with 5 to 9 expected to be hurricanes, and 2 to 5 could develop into major hurricanes with winds exceeding 111 mph.
Wind is arguably the most significant threat, though flooding often goes underestimated.
Currently, FEMA’s special flood hazard area includes about 4 million homes which could potentially flood more than once a year. Yet, an analysis from the climate risk firm First Street suggests that an additional 2 million homes outside these designated zones might also face considerable flooding risks.
The implications extend beyond property values. A tragic flood in July cost the lives of at least 136 individuals, including many children, in central Texas.
Wildfires are increasingly becoming a notable concern as well, with about 6% of homes exposed to severe or extreme fire risks, around 40% of which are in California, according to Realtor.com.
Earlier this year, a wildfire in Los Angeles resulted in at least 30 fatalities and the destruction of thousands of homes. This followed the devastating fire in Maui, which caused over 100 deaths and an estimated $5.5 billion in damage.
