Natural disasters are threatening the stability of trillions of dollars in U.S. residential real estate, with extreme weather events—such as wind, fire, and flooding—jeopardizing property values across the nation, according to a recent analysis by Zillow.
The research reveals that homes at risk from severe wind conditions are collectively valued at over $17 trillion, representing more than half of the U.S. GDP. Properties vulnerable to wildfires are valued at approximately $9.1 trillion, while those exposed to major flooding risks total $7 trillion.
In terms of fire risk, the Los Angeles metro area tops the list, with properties worth a staggering $831 billion at significant risk. In fact, six of the eleven major metro areas across the country, each with at least $100 billion in homes at major fire risk, are located in California.
New York City, however, leads the nation in terms of homes exposed to both extreme wind and flood risks. In particular, properties in New York face a combined $593 billion in flood risk—just edging out Miami’s $580 billion, with no other major metro area surpassing $300 billion in flood risk.
Kara Ng, Senior Economist at Zillow, stated that the growing threat of natural disasters, along with rising insurance costs, is dramatically reshaping the housing market. “Home buyers are paying close attention,” Ng said. “With trillions of dollars in real estate vulnerable to these risks, making informed decisions about what is often the largest purchase of one’s life is more important than ever.”
Despite these risks, many high-risk areas continue to attract homebuyers, often commanding premium prices. Homes facing extreme flood risks listed for sale in June 2024 had a median price 22% higher than homes with minor flood risks. Similarly, homes in areas with extreme fire risks were priced 49% higher than those in low-risk zones.
The nationwide value of homes with extreme flood risk is nearly $2 trillion, while properties at high risk of fire are valued at $447 billion. This suggests that while climate risks are a concern, other factors, such as location and amenities, continue to drive property demand and values in these vulnerable areas.
A Zillow report also found that over 80% of prospective homebuyers take climate-related risks into account when searching for a new home. In response, the company has begun providing risk data on for-sale listings, offering insights into five key environmental risks: flood, wildfire, wind, heat, and air quality. This data enables potential buyers to assess long-term considerations such as safety, resilience, and the potential future costs of living in disaster-prone regions.
Further analysis reveals that properties in New York at significant risk of wind damage total approximately $3 trillion in value, with Miami and Boston both having homes at risk exceeding $1 trillion each. With trillions of dollars of real estate exposed to natural disasters, Ng emphasized that making well-informed decisions is essential in today’s market.
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