Rising costs and sinking home values
Climate-ready homes, soaring insurance costs, and tips every homeowner should know
GOOD NEWS
Climate change poses risks to homes across the world, but there are creative ways to innovate and minimize those risks. One idea is amphibious houses in flood-prone areas. These homes rest on the ground during the dry season but actually float when it floods. This idea is not new: the Manobo indigenous community in the Agusan Marshlands of the Philippines have long lived in floating houses built to weather frequent storms and flooding, and permanently floating neighbourhoods already exist in the Netherlands and many other countries.
The Buoyant Foundation Project, founded by University of Waterloo professor Elizabeth English in 2006, seeks to retrofit existing homes to make them amphibious. ”With amphibious construction, water becomes your friend,” she told Anthropocene Magazine. “The water gets to do what the water wants to do. It’s not a confrontation with Mother Nature—it’s an acceptance of Mother Nature.” Flood-resilient settlements, also known as climatopias, could be built around the world in coastal regions facing the risk of sea level rise and flooding.
There are also ways to make homes and communities more fire resistant. Some steps are simple, such as keeping vegetation well-trimmed and away from the house. Design choices themselves can also be protective, including avoiding overhanging roofs and eaves. Then there are fire-resistant materials, such as gypsum board inside walls and fire-rated sheathing outside of the house instead of wood. Most experts argue, however, that living with fire goes beyond simply choosing which materials to use; it will require redesigning communities and altering social expectations.
Here’s a handy list of other steps you can take to future-proof your home against climate change-fueled extremes, from heat waves to hurricanes. They include sealing air leaks, installing a heat pump (and solar + storage, for energy if the grid goes down), insulating pipes and walls, replacing old windows, improving drainage on your lot, and installing storm shutters if you live in a hurricane-prone area.
But the bottom line is clear: our infrastructure was designed and built for a climate that no longer exists. We need changes at scale—to building codes, community design, and more—to keep us safe.
NOT-SO-GOOD NEWS
Climate change is already eroding home values and driving up insurance costs worldwide. A new analysis by First Street warns that as these trends continue, they could fundamentally disrupt how many people build financial security.
In Australia, for example, 15% of households already pay more than a month’s salary for home insurance, largely due to increasing flood and storm risks. That’s a massive expense that doesn’t even cover mortgage payments, household bills, or other expenses. Within ten years, as many as 10% of all homes across the country could become un-insurable, one recent analysis warns.
In New Zealand, a recent report, “Premiums Under Pressure,” estimates that 10,000 properties could become un-insurable within 25 years due to coastal erosion and rising sea levels. Unsurprisingly, low-income communities are hit hardest—yet another examples of how climate change disproportionately impacts those who’ve contributed the least to it and have the fewest resources to adapt.
Canada saw record-breaking insurance payouts last year—$8.6 billion in claims from flooding, wildfires and hailstorms, according to the Insurance Bureau of Canada. That’s double the 2023 total and a nearly 400% increase over the last decade. Yet even this staggering figure covers only part of the damage. As this article explains, “many Torontonians lack overland flood insurance, so the $1 billion from this summer’s southern Ontario floods represent only a quarter to a third of the total cost.” As homeowners shoulder the remaining financial burden, it depletes their savings and leaves less to cover bills and mortgage. And it's not getting any better: insurance rates are forecast to spike sharply this year in response.
In some of the most climate-vulnerable areas, insurance companies have stopped issuing new homeowner’s policies and home prices may have already peaked—California being a prime example. I shared a few weeks ago how State Farm had already pulled out of Pacific Palisades, where the worst of the recent LA wildfires began, earlier this year due to increasing risk of wildfire. Across the U.S., 10% of homeowners don’t have insurance.
“The implications are staggering: Climate change is upending the basic assumption that Americans can continue to build wealth and financial security by owning their own home. In a sense, it is upending the American dream,” ProPublica’s Abrahm Lustgarten wrote of the First Street report - and I’d say this applies to everyone, not just Americans!
With 66% of American adults owning a home—and home equity representing about 67 percent of their total savings—there is a lot at stake. First Street predicts that some 55 million Americans could be forced to migrate in the next 30 years due to worsening climate risks.
For generations, homeownership has been a path to financial security in countries around the world. But as climate change reshapes the landscape, that path is becoming increasingly treacherous. The longer meaningful action is delayed—both at the policy level and in how we build and insure homes—the more families will find themselves trapped in homes they can’t afford to protect, insure, or sell.
Sea level rise, wildfires, and extreme storms may pose different threats depending on where we live, but the reality is the same: climate change is loading the weather dice against us. As this Global Weirding episode explains, and this helpful infographic from the New York Times illustrates, climate extremes are increasing everywhere, and they’re putting us all at risk.
WHAT YOU CAN DO
Home insurance is getting more expensive and difficult to obtain—but it’s still an important way to insulate most of us from financial risk. If you’re in the market for a new policy, this excellent Washington Post Climate Coach column is full of helpful tips. Although this resource is U.S.-specific, many insurers use the same principles around the world. Here are some highlights:
Request a (free!) Comprehensive Loss Underwriting Exchange (CLUE) report for your property, which is essentially an insurance bill of health.
Consider whether you want to carry flood insurance on your property by finding out your county’s climate risk (here are climate risk atlases for Canada, Australia, New Zealand, the UK and a list of atlases for EU countries) and, if you live in the U.S., checking on the FEMA website to see if your home sits in a 500-year floodplain.
Work with your insurance carrier to create a customized policy for your property and shop around at different companies to find the best fit.
Consider weatherproofing your home against the specific climate risks it faces. Some insurers will even give you discounts for this.
People often talk about moving to “climate havens”—places thought to be safe from climate extremes. But recent flooding in Asheville, NC—once considered a haven itself—taught us that nowhere is truly safe. No matter where we live or plan to move, we must factor in climate risks. Choosing neighborhoods at lower risk of flood or fire, preparing for extreme heat, having a disaster plan, and investing in strong communities can make all the difference.
I wonder if I can forgo more costly “Replacement” homeowners insurance for a custom policy that might downsize and/or rebuild a more resilient and climate friendly home. I’m not sure we would need to replace everything.
Smart insurance rate setting would reward fire- and flood-proofing investments with lower rates.