Natural disasters pose an increasing threat to the housing market as homeowners risk damage to their homes and decreasing property values. Despite these risks, people are still choosing to move to areas prone to natural disasters, often motivated by housing affordability or an attractive climate. According to housing market data tracker Redfin, the number of people moving to flood-prone counties has more than doubled since 2020. Phoenix, which faces drought and heat risks, remains a top migration destination as well despite record-breaking high temperatures in June. Redfin's chief economist Daryl Fairweather says more people should take these risks into consideration when choosing where to purchase a home.
“Homes are historically unaffordable right now with high prices and mortgage rates. The U.S. is also in a housing supply crisis and short millions of homes, so there’s little hope for lower prices anytime soon. There is already a lot for homebuyers to consider during this difficult time to buy. However, what homebuyers might not realize is that climate threats could dramatically impact their finances during an already challenging time. For example, homeowner’s insurance premiums increased 21% from May 2022 to May 2023, and that jump in Florida was 35%. State Farm is no longer writing policies in California, and other major insurers have pulled out of states facing climate threats. The federal government can’t always pick up slack when private insurers leave, and even when a homeowner gets money to pay for damage, there’s a cap.”