In 2025 alone, the U.S. has already endured 15 billion-dollar climate disasters – from wildfires scraping across Los Angeles to hurricanes and tornadoes tearing through the Midwest and the East Coast, awareness is at an all-time high. Damages are mounting on the heels of 2024’s record breaking heat, which drove flooding and fueled even more destruction. It’s safe to say climate change is no longer a distant threat, as it’s now shaping where and how Americans buy homes.
For first-time buyers, especially Gen-Z, this reality is unavoidable. Affordability often pushes this demographic toward regions most vulnerable to disasters, while safer markets grow more expensive and competitive. The result is a new kind of housing dilemma: choosing between financial stability and physical security. As climate risk becomes a factor as critical as price and location, buyers, agents and developers are being forced to rethink what makes a home a “safe investment.”
Climate risk reshapes affordability
Of all property in the coastal U.S., about 10% face very high or extreme risk of natural disaster. That means that no matter where you’re buying, the impact and future risk of climate change is top of mind. This stress is shaping the market, particularly for first-time buyers, many of them Gen Z, who are entering under difficult circumstances.
According to Redfin, 39% of agents say that climate change is already influencing home purchases. They report that low-risk homes sell faster and at a premium, while properties tied to higher risk linger on the market. But new buyers aren’t competing for those premium homes. Instead, they’re prioritizing affordability — even when that places them squarely in high-risk regions.
Affordable housing is particularly prolific in the south and the Midwest, where natural disasters are the highest-occurring. States like Kansas and Nebraska offer entry-level homes (single-family) for under $300,000, while median incomes sit between $60,000-70,000. Yet much of this affordability sits directly in the path of Tornado Alley and other climate-vulnerable zones.
The affordability in lower-risk areas isn’t going to get any better, either. One projection estimates that by 2055, property appreciation will slow in more than 70,000 neighborhoods due to climate risk. Those that can will relocate to safer areas, leaving properties behind that may project affordability, but really fall in high-risk zones. In Ohio alone, a state considered to be relatively safe from climate disasters, the average number of billion-dollar disaster events rose from 1.6 in 1990 to 7.2 by 2024. These statistics continue to fuel fear, and inspire another projection that 55 million Americans could voluntarily relocate by 2055 to escape climate risk.
To address these concerns, real estate platforms are beginning to provide climate risk data alongside listings. Zillow partnered with First Street in 2024 to show wildfire, flood and storm risk on property profiles – a move that forces buyers to weigh climate risk alongside price. Realtor.com or Redfin.com use FEMA flood maps to offer similar insight, though these maps are often outdated and fail to produce the necessary predictions to make an informed decision.
The real estate market now finds itself at a stand still, which it can’t afford. Climate change continues to produce events that cause billions of dollars in damages, and buyers are taking notice. Those that have the means have begun buying up the safer properties, introducing climate gentrification in places like Miami, Houston and New Orleans. Meanwhile, lower-income buyers – many of them first-timers – are left navigating affordability in zones where disaster risk only continues to climb.
Gen Z is at the center of the affordability-climate trap
In 2024, Gen-Z accounted for 13% of all homebuyers but 25% of first-time mortgage loans. They are responsible for stirring the real estate market, yet they are also more likely to take on debt in pursuit of a first home. Because many of the homes within reach of their annual incomes are located in high-risk areas, these buyers often face hidden costs tied to climate vulnerability.
Some features of sustainable living can offset that risk in special circumstances. For example, while living in Tornado Alley carries storm-season dangers, abundant sunlight makes the region well-suited for solar power, allowing homeowners to lower energy costs. Developers are also racing to build homes designed to withstand the impact of tornados and floods, while integrating renewable energy options such as wind and solar.
But these innovations remain expensive. Rather than investing boldly in climate resilience, higher-income buyers are increasingly relocating to low-risk areas – a trend known as climate migration – settling in places like Cleveland, where lifestyle disruptions are minimal. For Gen-Z buyers that leaves limited choices: shoulder the extra costs of building, retrofitting affordable but resilient housing, or gambling with the “it won’t happen to me mentality.”
The result is a moral hazard of affordability.
Insurance pressures reshape the market
Propelled by climate risk, insurance costs are climbing sharply. Providers argue that higher premiums reflect the increased likelihood of claims, but the effect is clear: safety and security are increasingly priced as luxuries.
In Florida, homeowner insurance rates were four times the national average in 2023, while State Farm stopped writing new fire policies in California the same year. Since then, thousands of policies have been non-renewed as insurers retrench from high-risk markets.
What remains, then, is a stock of “affordable” homes with little or no insurance protection – leaving owners financially exposed when disaster strikes. While long-term investment in these properties could pay off, it’s an expensive venture that few can afford to take, given the pace of climate change.
The way forward, many argue, lies in greater transparency and adaptation. Zillow’s partnership with First Street in 2024 to show climate risk data was a step in that direction, but federal and state regulation to require standardized disclosure has stalled as of March 2025.
There are, however, examples of progress. Sea walls have proven effective when maintained, and controlled burns in California have reduced wildfire fuel. Some market watchers even suggest a two-tier market model may emerge: intentionally low-cost, “disposable” residences in high-risk areas, contrasted with higher-priced, fortified properties designed to endure.
Ultimately, the lesson is clear: climate risk is real estate risk. While smart adaptation can mitigate the damage, it cannot eliminate it. For the housing market to remain viable, protections must extend not just to those who can afford safety, but to all buyers navigating an increasingly risky landscape.
