Climate change will cause a $1.47 trillion decline in U.S. home values by 2055, according to a new study from climate-research company First Street. Rising home-insurance costs and more homeowners spurning some risky neighborhoods will drive these declines, First Street said.
The study is an attempt to quantify the economic risk that weather events such as hurricanes, drought and heat waves pose to many Americans’ biggest financial asset—their homes.
Thousands of displaced Americans are currently contending with the fallout from recent natural disasters including this year’s wildfires in Los Angeles and hurricanes that ravaged the Southeast last fall.
The relationship between climate change and home values has become a more urgent question as losses from storms, wildfires and other natural disasters are hitting new records. Climate change is making many of those events worse, scientists say, and more Americans have moved to disaster-prone areas in recent years, increasing the number of properties at risk.
First Street’s study projects that average home-insurance premiums will rise 29.4% in the next three decades and that the number of Americans who will consider climate risks when moving will soar, from 5.2 million in 2025 to 55 million in 2055.
“One of the pain points for homeowners in the coming years is going to be affordability of insurance and property taxes,” said Benjamin Keys, professor of real estate and finance at the Wharton School of the University of Pennsylvania. “There are people who are going to be stressed and will want to relocate.”
