A recent report by Realtor.com titled "Housing and Climate Risk Report 2026" revealed that climate risks have become one of the most prominent factors affecting the US real estate market, with nearly a quarter of homes in the United States exposed to severe or severe risks as a result of floods, fires and winds, with a total value of up to $11.2 trillion.
And the report confirms that the effects of climate change are no longer just future threats, but have turned into direct financial burdens borne by homeowners, through high fees for housing associations, increased insurance premiums, and high rates of defaults in the payment of mortgages, at a time when buyers continue to demand homes located in high-risk areas despite these risks.
23% of U.S. homes are under direct threat
According to the report, 23.1 percent of U.S. homes currently face severe or extreme climate risks, whether from wind, flooding or wildfires, making climate risks one of the most undervalued factors in the U.S. housing market.
He pointed out that millions of Americans usually choose their homes based on price and location, but the true cost of climate risks often doesn't emerge until years after purchase, when additional expenses begin to accumulate.
Housing fees rise before disasters strike
And homeowners in high-risk areas pay higher fees for residential associations (HOA), even before they are exposed to any natural disaster, the report showed.
The average monthly fee for homes located in high-risk areas was $192, up $67 or 53.6% compared to homes with lower risk.
As for apartments and gated complexes, the average fee is $548 per month, compared to only $350 in low-risk areas.
Delaware recorded the highest difference in residential association fees, followed by South Carolina, Oregon, Maryland, and Pennsylvania.
Portland, Washington, D.C., Seattle, Columbus, and Baltimore were among the cities with the highest increases.
Flood Insurance Loses Subscribers
The report monitored a continued decline in the National Flood Insurance Program (NFIP), coinciding with a significant rise in insurance premiums.
Between May 2025 and May 2026, the number of insurance policies in force decreased from 3.62 million to 3.45 million, a decline of 4.5%.
Texas recorded the largest decline of 7.8%, followed by Oklahoma, Idaho, Mississippi, and Alabama.
The report attributes the decline to a new pricing system that links the value of the insurance to the actual risk score of each property, resulting in an expected average annual premium rising from $689 to about $1,288.
The report's authors argue that this increase has prompted an increasing number of families, especially those with limited incomes, to forgo insurance despite living in flood-prone areas.
Two million homes outside official danger maps
And the report warned that flood maps approved by the Federal Emergency Management Agency (FEMA) do not fully reflect reality, as there are about two million homes, worth nearly a trillion dollars, at risk of major flooding without being officially classified within danger zones.
Because of this, lenders do not require owners of these homes to have flood insurance, and buyers may not be aware of the real risks when buying the property.
Climate exacerbates loan defaults
And the report pointed out that the repercussions of climate change also reflected on the real estate finance market. Louisiana and Mississippi have the highest rates of serious defaults on mortgages, at 1.7% and 1.4%, respectively, compared to the national average of 0.8%.
Florida and Texas also had default rates above 1% by September 2025, up from just 0.5% two years ago.
And the report finds that these increases are due to two overlapping factors: direct losses from hurricanes and natural disasters, and the continued rise in insurance premiums, which increases financial pressures on homeowners.
Buyers don't move away from dangerous areas
Despite these challenges, the report revealed that buyer behavior has not changed fundamentally. In Santa Clara County, California, homes in high-risk areas sell for about 22% less than lower-risk homes, but have a higher viewing rate of 48%.
And in Los Angeles, the price of these homes is down about 25%, while attracting 23% more attention.
And the report suggests that affordability is driving buyers to accept climate risks, as low prices provide an opportunity to own a home in high-price markets.
The impact of disasters does not last
The report provided an example of this through the January 2025 Los Angeles fires.
After the fires, buyers' interest in high-risk homes fell by about 10%, but demand returned to normal levels in just one month, before later surpassing previous levels.
And the report finds that the pressures associated with real estate prices in California are stronger than the concerns related to climate risks.
Lifestyle Overcomes Risk
And some buyers are willing to pay higher prices for homes located in dangerous areas if they offer distinctive natural advantages.
In Anne Arundel County, Maryland, homes in high-risk areas are selling for 44% higher prices, thanks to their view of the Chesapeake Bay.
And in Llano County, Texas, these homes are twice as expensive as the less risky ones, due to the demand for farms, rivers and landscapes.
In Montana, home prices near national parks and lakes are increasing by 55%, as demand continues to rise.
Calls for enhanced transparency
The report concluded by emphasizing that the goal is not to prevent citizens from buying homes in vulnerable areas, but to enable them to make informed decisions by providing clear information on the future costs associated with climate change.
And the report’s authors emphasized that early disclosure of climate risks gives buyers a more complete financial picture, including the potential for higher insurance, housing association fees, and potential disaster costs, rather than discovering these burdens years after buying a home, when they become more difficult to address.
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