The Cost of Climate Risk Climbs MABA MassachusettsRealEstate FirstTimeHomeBuyers MaBuyerAgent

 With Los Angeles County having been riddled with wildfires and the southeastern U.S. susceptible to tropical storms and hurricanes on an annual basis, trillions of dollars’ worth of U.S. real estate is at major risk of damage from flood, fire, or extreme wind, according to a new Zillow report.

 U.S. homes with major wind risk a risk score of five or higher, according to First Street data displayed on for-sale listings on Zillow are worth at least $17 trillion in total, equivalent to more than half of the U.S. GDP. Homes with major fire risk are valued at $9.1 trillion, and homes with major flood risk are worth a cumulative $7 trillion.

 “The risk of natural disasters and rising insurance costs are profoundly reshaping the housing market. Home buyers are paying attention,” said Kara Ng, a Senior Economist at Zillow. “With trillions of dollars in real estate vulnerable to these risks, informed decision-making for what is the biggest purchase of many buyers’ lives has never been more critical.”

 Eleven major metro areas have at least $100 billion of residential real estate with major risk of fire, and six of those are in California. The Los Angeles metro has the highest total value of homes at major risk of fire, at $831 billion.

 The New York City metro area stands above all other major markets with the highest total value of homes at major risk of flood and extreme wind. For flood risk, the total value of homes at risk in New York ($593 billion) edges out Miami ($580 billion), while no other major metro exceeds $300 billion at risk. New York homes with major wind risk total roughly $3 trillion in value, with the value of Miami and Boston homes at risk also exceeding $1 trillion.

 More than eighty percent of home shoppers consider climate risks when looking for a new home. Still, many high-risk areas remain desirable and often have higher home values. Of homes with an extreme flood risk a risk score of nine or ten listed for sale in June 2024, the median list price was twenty two percent higher than for homes with minor risk scores of one or two. The median list price for homes with extreme fire risk was 49% higher than homes with minor fire risk. Homes with extreme flood risk are worth just under $2 trillion nationwide, and homes with extreme fire risk are worth a total of $447 billion.

Click here for more on Zillow’s examination of the U.S. home market and climate risk.

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