Imagine losing your home not because you lost your job or couldn’t make payments, but because a hurricane damaged your property and your insurance didn’t cover the repairs. Unfortunately, this scenario is becoming increasingly common—and it’s about to get much worse.
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The Alarming Numbers
A groundbreaking study from First Street Research has uncovered a troubling trend that should concern every homeowner in America. According to their analysis, climate-related foreclosures could surge by 380% over the next decade. Even more shocking? By 2035, extreme weather events could account for nearly one-third of all foreclosures nationwide, compared to just 7% today.
This isn’t just about losing homes—it’s about losing the foundation of American wealth. For most families, their home represents their largest financial asset, making this crisis particularly devastating for middle and lower-income households.
The Financial Fallout
The ripple effects extend far beyond individual homeowners. Lenders are facing a tsunami of losses they never saw coming:
Jeremy Porter, head of climate implications at First Street, calls these the “hidden risks” of climate change—costs that lenders simply aren’t factoring into their decision-making process.
The Insurance Gap Crisis
Here’s where things get really concerning: the very insurance meant to protect us is failing. As premiums skyrocket and insurers abandon high-risk markets, homeowners are finding themselves dangerously exposed.
The numbers tell the story:
Who’s Most at Risk?
The communities facing the greatest danger share several characteristics:
Florida leads the pack, with 8 of the top 10 highest-risk counties in the nation. Duval County alone could see $60 million in credit losses from 900 foreclosures in a single severe weather year.
But this isn’t just a coastal problem. Louisiana, California, and northeastern states are also in the crosshairs, while inland areas face growing threats from extreme rainfall and river flooding.
The Flood Zone Blind Spot
One of the most alarming findings involves flood risk mapping. While FEMA identifies about 8 million at-risk properties in its flood zones, First Street estimates the real number is closer to 18 million homes—more than double the official count.
The problem? FEMA’s maps don’t account for extreme precipitation events, leaving millions of homeowners unaware of their true flood risk and therefore uninsured.
“About half the people with significant flood risk aren’t mapped into FEMA’s Special Flood Hazard Area,” Porter explains. “This leads to massive underinsurance across the country.”
What This Means for You
Whether you’re a current homeowner, potential buyer, or real estate professional, these trends will likely impact you:
For Current Homeowners:
For Potential Buyers:
For the Market:
The Path Forward
The solution isn’t simple, but it starts with awareness. Lenders need to integrate climate risk into their underwriting processes, even though this might make homebuying more challenging in the short term.
As Porter notes, “It’s going to increase the price of homes. It’s going to increase interest rates.” But the alternative—widespread foreclosures and financial instability—could be far worse.
Updating flood maps alone could cost $11.8 billion according to industry estimates, but this investment pales in comparison to the projected losses from inaction.
Important Steps to Rent Your Home Out from A to Z
Step by step checklist for getting a home rented, and link to the full property management guide
1 Consider strengths and weaknesses for your home and location and consider special strategies to utilize them. Is it a college area? If so, you’ll likely handle a lot differently from low income, or a suburb
2 Get the property in show-ready condition by handling repairs, but also low-cost aesthetic fixes like spray painting rusted AC grates, and other things that really stand out. A sure way to attract sub-par tenants and repel the rest is to show a home with unrepaired issues
3 Decide whether you’re going to allow pets or not. Before you decide, know that for most landlords it’s the single best thing you can do to increase your “bottom line” profit over the long term. More on this subject here
4 Set a rental rate that will balance a minor amount of time on market hassle, with monthly rate. Whether in the form of owner-occupied showings, stress, or vacancy. Most owners fail to properly account for these subtle but real costs, especially vacancy. Vacant homes are much more costly than most account for. We can provide a free rental rate estimate compiled by people, not an algorithm, here
The Bottom Line
Climate change isn’t just an environmental issue—it’s a financial crisis in the making. As extreme weather becomes more frequent and severe, the traditional approach to homeownership and lending is proving inadequate.
The question isn’t whether this crisis will unfold, but how prepared we’ll be when it does. For homeowners, lenders, and policymakers alike, the time to act is now.
For more information, visit Climate change could drive surge in foreclosures and lender losses, new study finds – CBS News.
