Climate Risks Reshape Real Estate

Climate-related disasters are reshaping the U.S. housing market, with new data revealing alarming projections. A 2025 report warns that natural hazards like floods and wildfires could cost mortgage lenders $1.2 billion this year alone, with numbers expected to surge by 2035. Buyers and sellers alike must understand these risks and take proactive steps in every transaction.

Rising Climate Risk in U.S. Real Estate

Climate change is no longer a distant concern—it’s becoming a defining factor in the real estate decisions made across the United States. According to recent research by the First Street Foundation, the financial consequences of climate-related events are intensifying. In 2025 alone, natural disasters such as floods and wildfires are projected to result in approximately $1.2 billion in mortgage losses and 19,000 property foreclosures. The outlook grows even grimmer by 2035, with projected losses ballooning to $5.4 billion and 84,000 homes at risk of foreclosure. These numbers highlight a growing urgency for both buyers and sellers to factor climate resilience into their real estate strategies.

What Homebuyers Need to Watch For

For homebuyers, the implications are profound. Many popular regions—coastal Florida, California, Louisiana, and inland areas affected by wildfires—are seeing a steady increase in insurance premiums or outright denial of coverage. In some cases, insurance costs have doubled within two years, making homeownership suddenly unaffordable even after purchase. Lenders are also reevaluating risk in these areas, sometimes requiring additional insurance policies or charging higher rates to borrowers in high-risk zones. Buyers need to go beyond location and square footage; due diligence now includes researching flood zones, fire risk maps, and historical disaster patterns in a given neighborhood.

How Sellers Can Prepare and Adapt

Sellers, too, must adjust to this evolving landscape. Homes in areas newly classified as high-risk may sit on the market longer or fetch lower offers unless proactive measures are taken. Transparency is key. Sellers who can provide documentation of recent upgrades—such as flood barriers, fire-resistant materials, or elevated foundations—may gain a competitive edge. In fact, climate resilience features are starting to function as a selling point, especially among younger, sustainability-conscious buyers. Additionally, sellers should be prepared to answer detailed questions about insurance claims, policy costs, and the property’s disaster history.

Lenders and Regulators Respond to the Crisis

Financial institutions and government regulators are also responding to these emerging risks. Some banks are starting to limit their exposure in climate-prone regions by tightening lending criteria or restricting loan amounts. Meanwhile, proposed regulations may soon require mortgage lenders to disclose climate-related risks more explicitly. This could change how homes are appraised and how much buyers can borrow. Municipalities are also beginning to push back, with some cities investing in public resilience projects like seawalls or firebreak zones to preserve local property values.

Long-Term Resilience Now Drives Decision-Making

Understanding climate risk isn’t just a financial concern—it’s a matter of long-term stability. Buyers need to consider not only the initial affordability of a home but its sustainability over the next 10–30 years. Will the home still be insurable in a decade? Will resale value drop due to unmitigated climate exposure? These are questions that used to be niche but are fast becoming central to home purchasing decisions. Sellers, likewise, must look beyond curb appeal and invest in features that improve the climate resilience of their property. From backup power systems to smart water drainage, forward-thinking upgrades can prevent major losses—and help close the deal.

Climate Risk Is Now a Core Market Factor

In conclusion, climate risk is no longer an optional consideration in real estate—it’s a necessity. As disasters grow in frequency and intensity, the housing market must adapt. Buyers should conduct thorough research and prepare for long-term ownership challenges, while sellers should prioritize resilience and transparency. Both sides will benefit from understanding how climate change affects not just the environment—but the value, insurability, and security of American homes.

Scott Whitwam

Denholm Premier Real Estate

5235 E Southern Ave D106-425 Mesa AZ 85206

Email: scott@scottwhitwam.com

Phone: (480) 223-3858

Scott Whitwam, Designated Broker for Denholm Premier Real Estate for the State of Arizona. Scott is perennial multi-million dollar producer who expects excellence from himself and his team. This demanding approach to real estate focuses on the needs and benefits of the client. This VIP service makes the process of buying and selling puts more money in client’s pocks. Scott is committed to being prepared for the twists and turns that are contained in each real estate transaction. Scott holds over 13 certifications and continues to obtain skills and training that few agents have. Certifications: – National Association of Realtors (NAR) Short Sale Foreclosure Resource (SFR) – Real Estate Buyers Agent Council (REBAC) Accredited Buyers Representative (ABR) – Council of Residential Specialists (CRS) Residential Construction Certified (RCC), – Certified New Home Specialist (CNHS) – Harris Real Estate University Certified Distressed Property Designation (CDPD), Luxury Distressed property Designation (LDPD), Accredited Shortsale Designation (ASD), Certified Home Affordable Foreclosure Alternative Specialist (HAFA), REO Specialist Designation (RSD), CBS Certified BPO Specialist (CBS) – Accredited Platinum Real Estate Professional (APREP) – Titanium Solutions Home Resource Consultant Designation (HRC) – Military Veterans Association of Real Estate Professionals (MVAREP) Associations: – National Association of Realtors (NAR) – South East Valley Regional Association of Realtors (SEVRAR) – Phoenix Association of Realtors (PAR) – Scottsdale Area Association of Realtors (SAAR) – Mesa Chamber of Commerce (MCC) – Veterans Association of Real Estate Professionals (VAREP) – Past National Association of Hispanic Real Estate Professionals (NAHREP) – Past National Association of Hispanic Real Estate Professionals (NAHREP) – Past Gilbert Chamber of Commerce (GCC) My Team and I look forward to serving you.