U.S. housing market could lose nearly $1.5 trillion in value due to rising costs of climate change

Climate Change Could Wipe Out $1.47 Trillion in U.S. Home Values by 2055

The devastation caused by wildfires, hurricanes, and flooding may seem shocking now, but these losses have long been factored into climate risk models that experts use to assess the impact of climate change on home values.

By 2055, as many as 84% of all U.S. homes could see their values decline, resulting in $1.47 trillion in losses, according to a report from climate-risk firm First Street.

“Climate change is no longer a theoretical concern – it is a measurable force reshaping real estate markets and regional economies across the United States,”
— Jeremy Porter, First Street’s Head of Climate Implications Research

Rising Insurance Costs & Home Value Declines

According to the analysis, home insurance costs are expected to rise by 25% nationwide over the next 30 years. This increase is driven by:

• 14% due to current underpricing of risk
• 11% due to escalating climate risks

The average home value drop nationwide is estimated to be about -3%, but in some regions, the impact will be far more severe. A dozen counties in Texas, Florida, and Louisiana are projected to lose half their home values as climate risks continue to mount.

A Housing Market Correction as Severe as 2008?

Dave Burt, founder of DeltaTerra Capital, has been closely tracking climate risk’s effect on real estate.

Burt—who was one of the few to predict the 2008 housing crash—believes a similar crisis is unfolding. He warns that in just five years, at least 20% of U.S. homes will be devalued due to climate risks.

“In the past, insurers haven’t raised prices significantly due to extreme weather. That’s all changing now as the system starts to break down,”
— Dave Burt, DeltaTerra Capital

As insurance premiums soar, the cost of homeownership rises. That, in turn, lowers home values. Burt predicts that in the next five years, these high-risk markets could see home values plunge by 30%, resembling the housing collapse during the Great Recession from 2007 to 2012.

Senate Concerns Over Financial Risks

Burt is not alone in raising alarms. Sen. Sheldon Whitehouse (D-RI) echoed these concerns during the confirmation hearing for Treasury Secretary Scott Bessent, warning that climate-driven financial risks could destabilize the housing and insurance markets.

With extreme weather events intensifying and insurers pulling out of high-risk states, the question isn’t if the housing market will be impacted—but how severe the correction will be.