How Climate Change Is Affecting Property Values in 2025

What if I told you that the house you bought five years ago for $400,000 might be worth $320,000 by 2035? Not because of a market crash or recession, but because of something that has nothing to do with interest rates or job markets.

Your home’s zip code is about to become the most important factor in its value. More important than square footage, more important than granite countertops, more important than that perfect school district you paid extra for.

According to Earnest Homes, property managers are quietly restructuring their portfolios around a single question: “Will this property be insurable in ten years?” It’s not the question they were asking in 2020. But then again, 2020 seems like a different planet now.

The uncomfortable truth? Climate change stopped being an environmental issue the moment it became a financial one. And that moment was about three years ago.

The $1.5 Trillion Reality Check

Let’s start with the big number that’s been making headlines. A new report from the First Street Foundation projects that climate change could wipe out nearly $1.5 trillion in U.S. property values over the next 30 years. That’s trillion with a T. To put that in perspective, that’s roughly the entire GDP of Canada.

By 2055, about 70,000 U.S. neighborhoods (84% of all census tracts) may experience net climate-related property value losses. So yeah, this isn’t just a coastal problem anymore. It’s an everywhere problem.

But here’s where it gets interesting. This isn’t happening because Mother Nature suddenly decided to get cranky. It’s happening because of two very real, very measurable factors: insurance costs going through the roof and people simply not wanting to buy homes in risky areas.

Insurance: The New Mortgage Payment

Remember when your biggest worry was whether you could afford the mortgage? Those days are looking quaint. Between 2021 and 2024, homeowners insurance rates rose 27% nationally. In high-risk areas, some homeowners are seeing their premiums double or triple.

Chandler Property Management is saying that property managers are feeling this squeeze too. When you’re managing multiple properties and insurance costs are eating into your margins like hungry termites, you start paying attention to climate data in ways you never expected.

Higher-risk areas are seeing average claims of about $24,000 compared to $19,000 for lowest risk areas. That’s a $5,000 difference that gets baked into your premiums whether you file a claim or not.

The Geography of Climate Risk

Let’s talk about where this is hitting hardest. Some counties in California, Florida and Texas will experience net declines of 10% to 40% in their property values by 2055. California’s recent wildfire season, which alone caused around $40 billion in insured losses, is just the latest reminder that climate risk isn’t theoretical.

But here’s what surprises people: it’s not just the obvious places. Sea level rise along the coasts, wildfires in the West, and worsening extreme weather translates into more expensive property damages, growing insurance claims, and rising insurance rates everywhere.

You might think your landlocked property in the Midwest is safe, but extreme weather events are becoming the new normal across the country. Heat domes, severe storms, flooding from unprecedented rainfall. These aren’t coastal problems anymore.

The Ripple Effect Nobody Talks About

Here’s something that caught my attention: we’re already seeing climate-driven migration patterns within the U.S. People are quietly factoring wildfire risk, flood zones, and extreme heat into their moving decisions. When enough people start relocating based on climate concerns, it shifts demand patterns in ways that can make your head spin.

Property managers are already seeing this. Suddenly, areas that were considered less desirable are getting more interest, while traditional hot spots are cooling off. It’s like musical chairs, but with entire housing markets.

What This Means for You Right Now

If you’re buying, you need to think beyond the traditional concerns. Location, location, location? Try location, elevation, and evacuation routes. That beautiful waterfront property might come with a hidden cost that shows up in your insurance bill year after year.

Residential properties exposed to flood risk are overvalued by $121-$237 billion. That means if you’re buying in a flood-prone area, you might be paying more than the property is actually worth when you factor in long-term climate risk.

For existing homeowners, this is a wake-up call to start planning. Maybe it’s time to look into flood barriers, fire-resistant landscaping, or even just understanding your actual risk profile. Because the market is starting to price in these risks whether you’re ready or not.

The Silver Lining (Yes, There Is One)

Here’s the thing that gives me hope: markets are pretty good at adapting. A subset of “climate-resilient” neighborhoods are already emerging. These are areas that are either naturally protected or have invested in climate adaptation measures.

Smart property managers are already pivoting toward these areas. They’re doing the math and realizing that paying a premium for a climate-resilient property today might save them thousands in insurance costs and property value losses down the road.

The Bottom Line

Climate change isn’t going to bankrupt the housing market overnight. But it is reshaping it in ways that are already visible if you know where to look. The properties that will hold their value (and maybe even increase) are the ones that can weather the storm, both literally and figuratively.

Whether you’re a homeowner, a buyer, or someone managing properties, the time to factor climate risk into your decisions is now. Not because the sky is falling, but because the market is already moving in that direction.

The question isn’t whether climate change will affect property values. The question is whether you’ll be ready when it does.

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