U.S. Real Estate Market to Lose Over $1 Trillion Due to Climate Migration

As climate change drives more frequent and severe natural disasters, the U.S. real estate market is poised to suffer a significant financial hit. According to a new report by climate analytics firm First Street, property values across the country could decline by more than $1 trillion by 2055 as Americans migrate away from high-risk areas toward more climate-resilient regions.

However, this shift won’t follow a simple pattern. The report, Property Prices in Peril, suggests that while some communities will see population declines due to climate risks and soaring insurance premiums, others—despite facing severe climate threats—will continue to attract residents due to favorable economic opportunities and lifestyle amenities.

The Four Types of Climate Impacted Areas

First Street categorizes U.S. neighborhoods into several distinct groups based on climate risk and migration trends:

• Climate Abandonment Areas – Regions where high climate risks and rising insurance costs are causing populations to decline.

• Risky Growth Areas – High-risk regions where, despite increasing dangers and rising insurance premiums, economic and social factors continue to drive population growth (e.g., major metropolitan areas in Texas).

• Climate Resilient Areas – Locations that are attracting more people due to their lower climate risks and controlled costs.

• Tipping Points – Areas on the verge of losing population due to mounting climate risks.

Interestingly, while climate abandonment areas are expected to lose 38% of their population, risky growth areas—such as certain booming cities in Texas—are projected to grow by 76% over the next 30 years.

Real Estate Values on the Decline

The impact on property values will vary based on location. On average, risky growth areas are expected to see a 1.7% decline in home prices over the next three decades. However, some regions, like Tampa, Florida, could experience price drops of up to 25%. Meanwhile, climate abandonment areas are predicted to face the biggest declines, averaging 6.2%.

A $1 Trillion Shift in Housing Market Value

By 2055, First Street estimates that the total loss in real estate value will exceed $1 trillion. This decline will be driven not only by population shifts but also by the need for property values to adjust downward in response to rising insurance premiums and increased climate risks.

As Americans continue to weigh climate dangers against economic opportunities, the housing market will undergo a profound transformation, with some regions thriving while others face long-term decline.