Unaffordable future: Study shows where climate shifts will drive insurance higher, home values lower

Climate change is beginning to reshape the housing market in North Carolina. A new national study projects that more than two-thirds of counties in the state could see home values drop in the coming decades due to rising insurance costs and increased exposure to flooding, storms and wildfires.

The First Street Foundation, a nonprofit climate research group, estimates nearly $1.5 trillion in property value could be wiped out nationwide by 2055. The group says the losses are driven by more expensive insurance premiums, falling demand in high-risk areas and increased migration to safer zones.

“Insurance companies are the first mechanism to start to price climate into the real estate market,” said Jeremy Porter, head of climate implications at the First Street Foundation. “We’re seeing insurers increase rates or pull out of areas completely. It’s a signal that the market is adjusting to risk that has been overlooked for decades.”

Even counties that have not faced recent weather disasters are starting to feel the effects. Because insurance operates on pooled risk, policyholders across the state absorb the cost of damage claims in hard-hit regions.

“Anytime you impact one area, it affects everyone,” said Jarred Chappell, chief operating officer of the North Carolina Rate Bureau. “Everybody across the state is going to feel it, good or bad.”

North Carolina has experienced firsthand the rising costs tied to weather events. After devastating flooding from Helene in 2024, Asheville lost its reputation as a "climate haven." Chappell said models now show storms are growing in size and frequency, while more people are moving into coastal areas where property values and risks are both rising.

That growing risk prompted the North Carolina Rate Bureau, which represents insurance companies, to request a 42.2 percent average increase in homeowners insurance rates statewide. Some coastal areas were facing proposed hikes of nearly 100 percent. After a legal challenge and negotiations with the North Carolina Department of Insurance, the two sides reached a settlement. Homeowners will now see a 15 percent average increase phased in over two years—7.5 percent this June and another 7.5 percent in 2026. Coastal counties will still see higher rates, with increases topping 30 percent in some communities.

And it’s not just happening along the coast.

The study shows that population could disappear from rural counties by 2055. Rising flood and wildfire risks are expected to drive insurance costs sky-high and cut home values by around 3%.

Climate-driven migration is expected to reshape the state, pushing people into urban centers like Wake County, where the population is expected to more than double by 2055.

That kind of growth brings economic opportunity, but it also puts a major strain on roads, housing, and public services.

Wilmington homeowner Darrell Penny decided to take action after suffering roof damage in a storm. He opted to install a fortified roof, which is designed to better withstand hurricane-force winds. Penny said the upgrade gave him peace of mind and already resulted in an insurance refund.

“There is a difference in the premium,” he said. “As a matter of fact, I’ve already gotten a refund.”

Programs in North Carolina help homeowners fund upgrades like fortified roofs, which can reduce damage and lower premiums. Insurance Commissioner Mike Causey has called for more investment in resilience programs and stronger building codes to prevent repeated losses.

Still, experts say addressing the broader risk requires smarter development and improved forecasting.

Dr. Phil Bresnahan, an ocean scientist at the University of North Carolina Wilmington, said coastal communities are still expanding into vulnerable areas such as marshes and low-lying floodplains. He believes local decisions about where and how to build will shape the future of housing in the state.

“We are putting ourselves directly at risk of severe events,” Bresnahan said. “And we are not doing enough in terms of development policy to change course.”

Bresnahan also expressed concern about federal funding cuts that have sidelined some of the ocean buoys used to predict incoming storms. Without real-time data, he said it becomes harder for officials and homeowners to make timely decisions during extreme weather.

Porter said the housing market is reaching an inflection point. Many homeowners are now realizing that rising insurance costs can make a property unaffordable, even if it survives the next disaster.

“You sign up for a 30-year mortgage expecting your costs to stay stable,” Porter said. “If your insurance spikes unexpectedly, you might not be able to keep up.”

He said buyers need better access to climate risk data so they can make informed decisions. Real estate websites like Redfin and Zillow now include flood and wildfire scores alongside home listings.

For more information on climate risk in your community, visit riskfactor.com, a site developed by First Street Foundation to assess property-level vulnerability.