A new analysis from First Street Foundation has issued a stark warning about the growing financial toll of climate change on American homeowners. The report reveals that climate-related disasters such as floods, wildfires, and hurricanes are not only causing physical destruction but also triggering a wave of home repossessions and mounting credit losses, with long-term implications for the housing market and financial stability.
According to the findings, an estimated $1.2 billion in mortgage-related losses is projected for 2025 alone, potentially affecting up to 19,000 properties. These losses stem largely from uninsured flood damage, rising insurance premiums, and the depreciation of home values in areas increasingly exposed to extreme weather events. Looking further ahead, First Street estimates that by 2035, nearly 84,000 homes could be repossessed due to climate-related financial strain, translating to over $5.4 billion in losses.
The escalating costs highlight a growing disconnect between climate risk and current property valuations. “As extreme weather becomes more frequent, homes in high-risk areas are rapidly losing value, especially when owners are hit with rising insurance costs or find themselves unable to secure coverage at all,” said Dr. Jeremy Porter, head of climate implications at First Street.
Insurance availability and affordability are central to the issue. In many high-risk regions such as coastal Florida, wildfire-prone areas of California, and floodplains along the Gulf Coast, insurers are either exiting markets or significantly increasing premiums. Homeowners unable to afford these costs are more likely to fall behind on mortgage payments, pushing them into foreclosure or forcing them to abandon their properties.
This financial strain does not exist in isolation. Lenders are also being affected, as declining home values reduce the collateral securing mortgage loans. When borrowers default, banks may struggle to recoup losses, especially in regions where climate risks have driven down market demand and resale values.
The report underscores that while government-backed programs like the National Flood Insurance Program (NFIP) provide a safety net for some homeowners, participation is limited and outdated floodplain maps often leave many at-risk homes uncovered. This creates a gap in protection that can devastate families and local economies alike.
“These are not isolated incidents anymore—they’re systemic threats,” said Sarah Dougherty, an environmental economist at the Natural Resources Defense Council. “The combination of climate vulnerability and financial fragility poses a real danger to the stability of the housing sector.”
In response to these findings, policy advocates are calling for stronger federal and state interventions. Proposals include updating flood maps, expanding affordable insurance programs, and incentivizing climate-resilient construction. Some lenders have also begun to incorporate climate risk assessments into mortgage underwriting, though these practices are not yet widespread.
First Street’s projections arrive amid a backdrop of record-setting weather events in recent years, with hurricanes, wildfires, and floods displacing thousands and causing billions in damage. The financial repercussions of these disasters are now catching up with homeowners and financial institutions, painting a sobering picture of future housing market vulnerabilities.
The implications extend beyond economics. As families are displaced and neighborhoods become unlivable, the social fabric of communities is threatened. Housing insecurity due to climate change could deepen existing inequalities, as low-income households are less likely to have adequate insurance or resources to recover from disasters.
“Without urgent policy changes and investment in climate adaptation, we risk turning climate events into foreclosure crises,” Porter added.
The First Street report serves as a wake-up call for policymakers, lenders, insurers, and homeowners alike. As the climate crisis intensifies, so too will its grip on one of the most fundamental aspects of American life: the ability to own and keep a home.