The U.S. real estate markets most vulnerable to climate change

The immediate effects of climate change, already being felt around the world, include extreme weather events, unpredictable crop yields and increased health risks from harmful air and insect-borne diseases. And the knock-on effects can be just as impactful.

One key area for homeowners and investors is the falling value of properties at high risk of damage from weather events and other conditions brought on by global warming. One recent study found that U.S. homes exposed to flood risk are overvalued by $121–$237 billion and that lower-income households suffer “greater risk of losing home equity from price deflation.”

More positively, a 2022 report from McKinsey suggests that climate change “not only creates new responsibilities for real-estate players to both revalue and future-proof their portfolios but also brings opportunities to create fresh sources of value.” Such opportunities might include redeveloping and “climate-proofing” at-risk properties and areas.

Whatever your perspective, if you are a homeowner or have interests in real estate, it is essential to understand the turbulence ahead. That is why the HouseFresh team has identified the cities and states with the highest proportion of home listings at high risk from climate change-related fire, flood, wind or heat in the next thirty years. To do this, we analyzed risk data for each property market using Risk Factor™ and Redfin, ranking cities and states based on the percentage of property listings that carry a major risk.

You can find our full methodology at the foot of the article.

The states and cities with the highest percentage of home listings with a major fire risk

Wildfires are not just a result of increasing heat but climate-related factors, such as increased droughts and tree-killing beetles, that make woodland more susceptible to fire.

Before we jump into the findings of our study, we have created a mini-infographic to explain the wildfire risk factor:

Every year, news of wildfires and associated losses hits our screens and re-ignites debates over climate change. Yet from 1990-2010, the areas where wildfires were most pronounced experienced 41% growth in the number of houses built (33% growth by area).

This made wildfire-prone land “the fastest-growing land use type in the conterminous United States” during that period, according to the study that produced those figures. According to Timothy Collins, a geography professor at the University of Utah, “people are drawn to those environments because of the amenities associated with forest resources.”

We found that Wyoming is the state with the highest proportion of listings with a major fire risk, by a significant leap. Not only are many houses built with high-risk materials in high-risk areas, but Wyoming has a “significantly disproportionate land-to-resource ratio,” meaning a low proportion of firefighters and other resources compared to the extent of the fires it suffers.

“In my experience, Wyoming has had wildfires that started to burn in one county on private lands and over the next several days, spread across three different counties, burning private, state, and BLM [Bureau of Land Management] lands,” Kelly Norris, Interim Wyoming State Forester, told a recent senate committee hearing, noting that Wyoming’s forests provide $26 billion of value per year.

Unsurprisingly, Wyoming is also home to the city whose property is most vulnerable to wildfire. As the chart above shows, 62% of listed properties in Cheyenne are high-risk. However, Riverside, Calif., is not far behind, at 59.2%.

Colorado Springs joins the leading pack with 46.4%, but other big cities have a significantly lower proportion of high-risk properties. This overall lower risk to city properties compared to the state-wide figures is partly due to the lower proportion of flammable vegetation in built-up areas.

The states and cities with the highest percentage of home listings with a major flood risk

Global warming leads to increased water evaporation, which intensifies rainfall. According to the Environmental Defense Fund (EDF), a rise of one degree Fahrenheit can lead to 4% more vapor in the air — meaning there may be as much as 9% more moisture in the air now than in 2023. And the effects of intensified rainfall are exacerbated by the urban environment, which has “eliminated many natural landscape features that would otherwise slow rainwater’s path across the land and absorb it deeply underground.” Meanwhile, rising sea levels pose an ever-greater threat to coastal areas.

Here’s how flood risk is measured:

Hawaiian properties are most at risk of flooding. As an archipelago, the state is at risk of rising sea levels, coastal erosion and storms, hurricanes and tsunamis. At Hilo Bay, the sea level has risen by 10 inches since 1950 and now rises by one inch every four years.

Louisiana (55.30%) and Florida (32.73%) complete the top three states for flood risk. According to McKinsey, “the value of homes in Florida exposed to changing climate-related risks are depressed by roughly $5 billion relative to unexposed homes.” In Florida, as elsewhere, this risk disproportionately affects minority communities.

We also found that the cities with the most homes at risk of flooding are in these states. St. Petersburg (42.7%) is on Florida’s Gulf Coast, while the Hawaiian capital, Honolulu, is second-most at risk (34.4%), as our following chart shows.

Twelve of the cities with the highest proportion of property listings at high risk of flooding are coastal. The real estate market is particularly sensitive to the threat of coastal flooding following Hurricane Sandy, which killed 182 people and caused more than $70 billion in damage — making it America’s second costliest storm after Katrina. In New York City, the price of flood zone properties not damaged by Hurricane Sandy fell by 8% in the wake of the disaster.

The states and cities with the highest percentage of home listings with a major wind risk

“[M]ajor hurricanes have caused more damage to local populations and ecosystems than any other natural disaster,” according to researchers. And they are on the increase, energized by warmer sea surface temperatures and intensified by higher sea levels.

The visual guide below explains how Wind Risk is measured:

Hurricane winds cover large distances at high speeds and are often connected to intense rainfall — hence the flooding described above. But the wind itself affects buildings in multiple ways, from cutting power lines to lifting roofs, tilting structures and even overturning whole homes.

We found eight states where 100% of listed property is considered at high risk of wind damage. The list is dominated by Atlantic Coast states, from Florida all the way up to Massachusetts.

Climate change is “poised to bring hurricanes that intensify quicker and, with them, a heightened risk of flooding to the U.S. Atlantic Coast,” reports the Department of Energy’s Pacific Northwest National Laboratory. Researchers at the lab discovered a “unique coastal phenomenon lies at the heart of the bustling hurricane activity” and that “the same mix of hurricane-favoring conditions doesn’t appear in the Gulf of Mexico.”

We also found that 100% of the listings in the top 14 cities are flagged for high wind risk. But in this case, the balance is more in the direction of the Gulf Coast. These cities include Corpus Christi, Texas, which was the point of entry for Storm Harold in August. That storm achieved wind speeds of 45-50 mph in the area; winds are given tropical storm status when they hit 39 mph.

Being a way back from the coast doesn’t guarantee protection either. The Louisiana cities in our chart are dozens of miles from the coast.

In 2020, Louisiana suffered its strongest hurricane in 150 years, with gusts up to 137 mph. “The hurricane severely damaged residential and commercial buildings, knocked mobile homes off their platforms and blew out windows from the city’s tallest building,” reports Climate360.

Many have found themselves displaced for months to hotels, trailers or even tents while awaiting insurance payouts and home repairs.

The states and cities with the highest percentage of home listings with a major heat risk

The risk of extreme heat levels is measured according to an area’s hottest month of the year. Extreme heat levels can unsettle a home from its very foundations, drying out the soil beneath the concrete and causing walls to crack and floors to slope. The materials that homes and the surrounding infrastructure are made from can buckle and warp, and heat can also cause further damage and disruption to home sensors and devices such as solar panels.

The short infographic below covers what you need to know about Heat Risk:

 

Once more, states on or near the Atlantic Ocean or the Gulf of Mexico are most at risk. In the case of heat risk, 100% of the properties in 13 states are flagged, while Alabama and Tennessee are not far behind on 99% each.

On the other hand, there are 13 states where no listed properties are considered at high risk from extreme heat. These are almost all inland, and the majority are in or around the Midwest.

Oklahoma stands out among the highest-risk states for being positioned some distance from the Gulf of Mexico. By the mid-2080s, Oklahoma will likely experience three to four times as many days above 100°F as it has now.

Unlike the majority of states, Oklahoma actually cooled over the last century. This was “due to natural cycles and sulfates in the air,” according to the U.S. Environmental Protection Agency, but “[n]ow sulfate emissions are declining, and the factors that once prevented parts of the state from warming are unlikely to persist.”

In contrast, the 15 most at-risk cities are all in the southeast and towards the coast. These include Norfolk, Va., where an $8.1 million building has recently been constructed to deliberately suffer the effects of climate change — and thus “showcase strategies to stay longer in harm’s way.”

In our city rundown, Chandler, Ariz., is the outlier, being positioned in the southwest and in a landlocked state. Heat is already the leading weather-related cause of death in Arizona, and Chandler’s position in the Sonoran Desert, compounded by the urban heat island effect, makes the city particularly vulnerable to dangerous temperatures. Just this summer, the city made the news when a local librarian reported that his shoes had melted while guiding children across a hot street.

Preparing for the Unknown

We know that climate change is coming and that conditions will become more difficult. However, the extent of the change is not yet known and depends greatly on the steps taken by international governments and corporations.

Homeowners, developers and other parties with interests in real estate can already take steps to mitigate the risk, damage and costs to property in the coming months and years. However, the precise risk faced by a property is not a simple issue to estimate: “The challenge with these perils is that you don’t see identical damage to each house,” says Tom Larsen, an insurance and spatial solutions specialist at data analytics firm CoreLogic. “So we use our spatial modeling to look on a granular level at every house. We can look at the elevation above the sea level of the first floor of a house and follow wildfire patterns property by property.”

Be it fire, flood, wind or heat — or, more likely, a combination of the above — forewarned is forearmed.