Extreme Weather Set to Drain Billions from U.S. Housing Market by 2050
New data from Cotality reveals U.S. states most at risk from extreme weather, with property losses projected to hit billions as climate risks accelerate.
POLICY WIRE — Washington, USA — A significant storm is gathering over the American residential real estate sector, as new projections forecast a massive surge in financial damages linked to volatile weather patterns in coming years.
A comprehensive report released Wednesday by the analytics firm Cotality identifies the specific states most vulnerable to climate-related disasters. The company utilized property property data to determine that 30 states are already sustaining billions of dollars in annual losses, figures that are expected to climb dramatically by the year 2050.
Dr. Howard Botts, the chief scientist at Cotality, noted that while the public often associates extreme weather with states like Florida, Texas, and California, the most intense concentrations of risk are not always located where one might assume.
As climate change intensifies both the frequency and power of storms, homeowners are encountering a new set of economic hurdles. The Cotality research suggests that hurricanes, flooding, and severe convective storms will be the primary drivers of national financial losses over the next several decades.
Simultaneously, the insurance industry is reacting by hiking premiums or, in certain instances, withdrawing from high-risk regions entirely, leaving many residents with insufficient financial protection.
Cotality developed its state rankings through a scoring model that evaluates the likelihood and severity of various weather perils. The data indicates that Louisiana faces the highest exposure to severe storms, a state well-acquainted with the devastation caused by events like Hurricane Katrina.
Currently, Louisiana endures $6.7 billion in average annual losses due to extreme weather, driven largely by hurricanes. The research firm predicts this figure will balloon to $11.4 billion by 2050, fueled primarily by a rise in inland flooding.
Mississippi and Florida follow as the two most vulnerable states due to their geographic susceptibility to hurricanes. Cotality estimates that total housing market losses in these two states will expand by approximately 62% and 54%, respectively, by 2050.
Even regions far from the coast, such as West Virginia, are expected to face a heavier financial burden from inland flooding. The analysis found that the ten states least exposed to weather disasters will still see their losses increase by nearly 38% by 2050.
it is important to remember that ‘low risk’ does not mean ‘no risk,’ Botts stated, adding that every state possesses a unique mix of perils and resilience, but weather-related costs are set to rise regardless of ranking.
California and Texas currently lead the list of states suffering the greatest greatest financial impact, with average annual losses reaching $18.2 billion and $11.5 billion. By 2050, Cotality projects these costs will hit $22.4 billion for California and $16.5 billion for Texas.
Other research has also highlighted the massive scale of these costs. In a report from earlier this year, the firm First Street found that severe convective storms—short-lived but high-impact events—accounted for $794 billion in insurance claims over the last quarter-century, surpassing the combined costs of droughts, earthquakes, and flooding.
Reporting by Policy-Wire (PW)
