Climate Change and Homeowners: Understanding the Risks and Solutions

As extreme weather-related disasters rise, every homeowner faces an urgent question: “How climate-ready is my home?” With the world breaching the key 2.7 degrees Fahrenheit warming threshold for the 12-month period in February 2024, a reversal of massive climate change is unlikely, even as its effects worldwide are due to get worse.

Yuehua Tang, an associate professor of finance at the University of Florida, has been researching how well companies are preparing for climate change, but he has also seen how people are responding to it in Florida. Given the major hurricanes that have passed through the state, Tang says locals are “right to be concerned their houses will be affected.”

On the other side of the country, Eric Rosenberg, a writer in Ventura, California, has already seen the damage extreme events can have, having lived through record-setting wildfires like the 2016 Thomas Fire, which damaged his property and forced his family to evacuate. “To say it left us with a traumatic memory would be an understatement,” he says.

Tang says there are ways for people to prepare for changes in weather patterns through insurance and other measures. He pointed to the many homes in Florida that have, in recent years, been destroyed by flooding. “If you’re proactive, you’ll raise the foundation of the house, then you probably won’t be affected,” he says.

Rosenberg agrees that preparation is key. “Climate change is certainly a reality we’re facing in Southern California,” he says. “From wildfires to larger rainstorms, we’re always taking small steps to stay prepared in case another major disaster heads our way.”

As climate change accelerates, so does the threat of extreme weather wreaking havoc on homes nationwide. While the threat can seem daunting, the good news is that you can fortify and help protect your home. Below, we detail the specific climate threats facing homeowners and actionable steps you can take to safeguard your property against flooding, fires, storms, and more.

Climate Change and the Risk to Homeowners

Climate change has meant far more than a change in global temperatures. In 2023, there were 28 weather and climate disasters, breaking records set earlier in the decade. The costs are enormous—2023 costs were expected to hit almost $100 billion—and are staggeringly higher than before.

In the 1980s, the number of billion-dollar disasters (Consumer Price Index-adjusted) averaged a bit more than three a year. During the 1990s and 2000s, that figure was 5.7 and 6.7 a year, respectively. The last three years have averaged 22 per year.

These figures match changes in weather patterns, which haven’t just caused aggregate increases in temperatures and rainfall but swings to more intense and extreme weather. Since 1901, rainfall levels in the United States (besides Alaska and Hawaii) have increased at a rate of 0.2 of an inch per decade, and recent years have seen a rise in extreme single-day events. In the U.S., nine of the 10 days with the most recorded rainfall have come since 1996. And tropical storm activity and flooding have increased, posing risks to homeowners.

Increased precipitation in some areas has been matched by heat and drought in others. Heat waves are now three times more likely than during the 1960s. Other regions have faced drought, which can lead to wildfires, such as those that have caused significant damage in Hawaii and California in recent years.

And you’re not imagining that the number of days you must stay inside, away from suffocating heat, is increasing. The heat wave season is now, on average, 49 days longer than 60 years ago, with heat waves hotter and lasting longer.

Homeowners nationwide must understand these escalating climate change risks to protect their properties. This involves fortifying homes against relevant threats, from elevating foundations to prevent flooding to fireproofing vulnerable parts of a home.

It’s a positive sign that more than 80% of homebuyers consider climate risks when shopping for a home, showing how widespread the threats have become. But that doesn’t mean homebuyers have changed where they want to buy. A Zillow survey from 2023 found that only 23% of respondents were considering whether to move to areas with fewer climate risks. That’s against 27% who said they were looking at areas with more risk.

Financial Impact of Climate Change on Homeowners

Worsening climate change poses long-term risks to everyone, but many have already felt its effects. Worsening heat waves and more frequent and intense natural disasters have devastating human and financial costs. Homeowners face intensifying climate threats like flooding, wildfires, storms, and heat waves that endanger their homes and property. Climate hazards fall into two main categories: climate events and climate conditions:

• Climate events: These are short-term, severe weather incidents directly caused by climate change. Examples include floods, wildfires, hurricanes, and droughts. Climate events lead to immediate disruptions and can cause significant damage.
• Climate conditions: These refer to long-term shifts in average weather patterns and the environment. Examples include rising average temperatures, rising sea levels, and ocean acidification. While less immediately destructive than climate events, climate conditions have a profound and lasting impact on ecosystems and economies.

Many homeowners are already adding up the financial costs. Besides the rising cost of homeowners insurance, which we cover below, many have come to expect more frequent damage to their homes. Even for those who are insured, repairs can be expensive. In 2021, one in 10 U.S. homes was affected by climate-related damage, with the total property damage costing almost $57 billion.

Rising temperatures have also increased the need for electricity. Since 1970, the average American home has doubled its electricity use during the summer. Experts expect that by 2050, almost 1,000 cities around the globe will experience typical summer highs of 95 degrees Fahrenheit, increasing the population exposed to those high temperatures eightfold to 1.6 billion people.

Climate change can have other significant economic implications for homeownership, including higher insurance premiums, decreased property values in high-risk areas, and increased costs for repairs and maintenance.

Government Initiatives and Policies Addressing Climate Change and Homeownership

Governments around the world have made efforts to fight climate change. In the U.S., President Joe Biden created the first National Climate Task Force and charged the group with four main goals:

• Reducing U.S. greenhouse gas emissions to half of 2005 levels by 2030
• Achieving net-zero emissions by 2050
• Reaching 100% carbon pollution-free electricity by 2035
• Focusing 40% of the benefits from federal investments in the climate and green energy to disadvantaged communities

These efforts are helping boost the deployment of solar power and battery storage, including residential solar. Recent changes have also created tax credits for homeowners who make energy efficiency upgrades and offer weatherization assistance to low-income homes.

While the Biden administration pushes for ambitious climate action, what those policies mean for each homeowner can be complex. Federal programs offer both opportunity and bureaucratic hurdles.

The Federal Emergency Management Agency’s (FEMA’s) Flood Mitigation Assistance Grant and Building Resilient Infrastructure and Communities are two programs that provide grants for projects to reduce flood risks, such as elevating homes or buying out houses in the most threatened areas. However, access varies wildly by locality, and the application process can be elaborate.

Similarly, there are energy efficiency incentives like tax credits and rebates for homeowners investing in energy-efficient appliances, solar panels, or insulation. These offer clear financial benefits but can require upfront costs.

Many federal programs rely on states and municipalities applying for and administering the funding. This creates an uneven landscape of support, dependent on local priorities.

Some states have stepped up their efforts. California, for example, established the FAIR (Fair Access to Insurance Requirements) Plan. Though the FAIR Plan began more than 50 years ago, the state has been enhancing it to help California homeowners access insurance coverage to homeowners where traditional insurance companies may refuse to underwrite properties.

Climate inequity remains a significant concern, as low-income homeowners often disproportionately bear the brunt of climate disasters and frequently lack the resources to invest in mitigation. Programs designed with equity in mind are crucial. The U.S. Census Bureau reported in 2023 that among those whose properties have had damage in the previous year, a third relied on loans or credit cards to do the repairs, which could determine their ability to pay for a mortgage or other necessary expenses.

While this concerns those with the credit to borrow, there are additional worries about those underserved by banks and other credit institutions. A U.S. Treasury report notes that given historical disparities across racial lines for obtaining credit, minority households with lower incomes could have problems accessing capital after a disaster, leaving them unable to make the repairs that their homes need.

Steps Homeowners Can Take to Mitigate Climate Change Risks

Climate change is a major risk for homeowners, but you don’t have to wait for a storm or other weather event to damage your home. There are steps you can take to limit your risk.

Adapt Your Home for a Changing Climate

Weather is already the top cause of damage to residences, so taking steps to protect your home can help prevent significant damage.

Basic maintenance, like regularly cleaning your gutters and adding a fresh coat of paint, can help prevent more significant damage from accumulating over time. Larger upgrades, such as replacing your roof or repairing broken shingles, can limit the risk of costly leaks.

Rosenberg, from Ventura, California, says he got tips for what to do in his own area. “I’ve learned from a local community council meeting about steps I can take to prevent wildfire damage in the future, including putting chicken wire inside our attic vents and making adjustments to our landscaping,” he says.

Homes are generally built with the climate of their area in mind. Houses in Alaska, for example, are more likely to focus on retaining heat and keeping their occupants warm, while homes in Arizona aim to keep things cool. Adapting your home to changing weather and climate can help make your home more comfortable and help it retain its value.

One essential step is to ensure your home is properly insulated. Poor insulation means losing heat in the winter and paying more to cool your home in the summer. Insulating your home effectively can help reduce the amount you spend on climate control. Similarly, upgrading your windows can be a good investment, further insulating your home.

Painting the exterior of your home a lighter color or changing the material used on the exterior of your home can also help mitigate heat. Darker colors absorb light and heat, which can make the inside of your home warmer. Investing in storm shutters and reinforcing roofs are also useful additions to help mitigate the effects of climate change.

Purchase the Right Insurance

No matter how prepared you are, you can’t avoid everything. There’s a good chance that at some point, a storm, flood, or other climate-change-related event will damage your home.

Buying insurance is the best way to protect yourself against this kind of loss.

Before buying a policy, take the time to compare options from several insurers. Also, consider what type of coverage you need and whether the policy you’re interested in has any exclusions. For example, most home insurance policies—especially in areas prone to them—specifically exclude flood damage. If you live in a region with a high flood risk, it’s essential to buy that additional coverage—indeed, it might be required by your mortgage company.

To protect yourself against loss, tailor the insurance you buy to the risks your home will likely face.

The Role of Insurance Companies in Addressing Climate Change Risks

Climate change is reshaping the entire insurance industry. For homeowners, this means skyrocketing premiums, disappearing coverage in high-risk areas, and a looming affordability crisis. Insurance companies, forced to adapt to the escalating costs of climate disasters, are passing the burden on to homeowners, with potentially devastating consequences for homeownership across the country.

One way that insurance companies have adapted is by raising rates. As climate change worsens and the risk of damage rises, insurers charge more to compensate for that higher level of risk. In some areas, insurance companies have stopped offering coverage entirely.

For example, State Farm has stopped insuring California homes because of rising wildfire risks. Meanwhile, homeowners in Florida, a state that regularly experiences hurricanes and significant storms, face ballooned home insurance costs. For some, the cost of home insurance rose by more than 40% in 2023 alone in a state where the average rate was already more than three times the national average.

Homeowners in other states, including California, Colorado, and Louisiana, are seeing the effects of climate change and have seen significant spikes in insurance costs—if they can get insurance at all. In Louisiana alone, over a dozen insurers have left since 2020, with state officials scrambling to avoid a catastrophe—100,000 homeowners have sought coverage from the state-run Louisiana Citizens Property Insurance Corp., the insurer of last resort. While it’s mandated to cost at least 10% more than the highest market insurance rate in the area—these elevated rates reflect some of the substantial costs of climate risk straining household budgets—the state is shouldering an immense financial risk, one that could cost billions come the next major storm.

It’s not just homeowners in some regions facing higher costs. Homeowners insurance premiums were up 21% from May 2022 to May 2023, according to an analysis by Policygenius. The costs extend beyond premiums; climate risk is making the reinsurance market (insurance for insurance companies) more volatile, impacting the industry.

Many homeowners are facing insurance rates that have become unaffordable. Given that mortgages may require that the homeowner carry insurance, the impact of climate change on insurance could cause a spike in foreclosures or an inability for people to buy homes in some parts of the country. This highlights how climate change is an economic equity issue, as low-income homeowners in disaster-prone areas are more vulnerable to these impacts.

Future Outlook and Recommendations

The unfortunate reality is that climate change is expected to get worse. The Earth is already experiencing many of its effects, and though efforts to curb pollution have seen some success, they have not limited emissions sufficiently to stop climate change. Many of the effects of climate change that scientists predicted have come sooner than or been more severe than expected.

Experts expect global temperatures to rise at least through the end of the century and possibly beyond. This will lead to sea levels around the U.S. rising by as much as 6.6 feet, leaving coastal areas facing extreme flooding or possibly going underwater. More frequent and severe droughts, heat waves, and longer wildfire seasons are also expected.

This does not paint the most glowing picture for homeowners, particularly those in climate-vulnerable areas. Yet, without major policy changes or market innovations, the following trends will continue:

• Spiraling costs: Insurance premiums will likely continue to rise, likely outpacing household income growth, increasing underinsurance (not enough coverage) or not being insured.
• Retreating insurers: Companies will further restrict coverage or pull out of high-risk markets entirely. Insurers of last resort, often state-run programs, will become overburdened, putting taxpayers at risk of massive bailouts following disasters.
• Deepening inequality: A tragic aspect of climate change is that communities that have had the least to do with sparking climate change (those with the lowest carbon footprint) are most likely to feel the brunt of its effects. Climate change’s effects on insurance will disproportionately harm low-income communities and those already facing housing insecurity. This could lead to displacement or forced migration away from at-risk areas.

Climate is a political issue, not a weather issue only. How governments respond to the crisis will dictate how homeowners can mitigate their risks. Other steps, such as adjusting your diet to consume more local foods that generate fewer emissions, reducing your reliance on gasoline-powered cars, and fighting waste, can also make an impact.

In addition to elevating and flood-proofing your home and buying the right insurance, tangible steps like installing impact-resistant windows, reinforcing roofs, and removing flammable vegetation will become increasingly necessary. Adopting resilience measures ahead of time costs less than rebuilding after a disaster.

The risks are daunting, but not unmanageable. “We know the changes coming, and I think there are lot of things people can be doing now,” Tang says.

Given flooding all along the coasts, tornadoes in the South and Midwest, wildfires in California, flooding all across the country, and hurricanes affecting the Gulf states and East Coast, it’s hard to find areas of the country where you can fully mitigate the risks of climate change. While no location is risk-free, these steps can mitigate some of the risks of climate change on your home and finances:

Consider climate risks when moving

• Research a location’s specific climate hazards (floods, wildfires, extreme heat, etc.).
• Review historical data and consult tools like FEMA flood maps to understand specific climate hazards.
• For those in very high-risk areas, weigh if a long-term relocation is the best option.

Ready your home

• Consider installing impact-resistant windows, reinforcing the roof, using hail-proof and windproof shingles, and attaching shutters for storms.
• Waterproof walls and floors in the basement and install backflow valves to mitigate flooding.
• Consider elevating your appliances.
• Invest in more or better insulation, and weatherize doors and windows to better handle temperature extremes and cut costs.
• For wildfires, try to use fire-resistant materials, ember-resistant vents, and fireproof roofs.
• Install smart home tech like leak sensors, fire alarms, and even automated water shut-off valves, which can prevent small incidents from becoming major damage. Some insurers offer discounts for using these.

Ready your exterior

• Choose native, drought-tolerant plants for water conservation and climate adaptability.
• Consider flood barriers or landscaping to redirect water away from your home.
• Examine your home’s exterior for hazards. These could be objects that the wind might throw against people or homes.
• Research your specific local risks (flood, wildfires, etc.) before choosing new trees or large plantings.
  

Lower and improve your energy use

• Install solar panels and battery storage for power during grid outages and energy not linked to fossil fuel use at other times.
• If you can’t invest in solar, a generator can help you stay temperate inside with extreme temperatures outside after storms. Many newer generators don’t just run on gasoline, but can use two or three fuel sources to give you options when fuel choices might be limited in your area.
• Upgrade to energy-efficient appliances.
• Explore microgrids for localized, community-level energy independence.

Safekeep your important documents and insurance information

• Document your belongings (photos, receipts) on a cloud service for faster processing of insurance claims.
• Don’t wait for renewal to check if your policy covers the hazards you’re most likely to face and if you have enough coverage for rebuilding costs.
• Consider supplemental policies for specific risks like floods.
• Create an emergency preparedness plan to respond to extreme weather events or evacuate if necessary. This includes emergency kits with supplies like food, water, and medicine. You should ensure you also have enough savings for your insurance deductibles and relocating for some time in the event of a major storm.

Leverage local guidance

• Connect with your county emergency managers, utility representatives, insurance agents, and community groups to understand the specific climate vulnerabilities in your area and home.
• Local organizations best know what problems a neighborhood is likely to face.
  

The Bottom Line

As extreme weather events continue to rise in frequency and intensity, homeowners can’t avoid reviewing how they can mitigate their impact on their homes. This may involve investing in resilient infrastructure, adopting sustainable practices, and staying informed about available resources and climate-related tax incentives.

In addition, policymakers and communities have a crucial role in helping homeowners by looking at building code updates, tax credits for home hardening, and investing in community-level flood protection.

Homeowners can better protect their homes and finances by looking at what can be done to prepare now while contributing to a more sustainable future.