Extreme Weather Puts $12.7 Trillion in Homes at Risk, Many Underinsured

More than a quarter of all homes in the U.S., representing $12.7 trillion in real estate value, are exposed to extreme hurricane, flood or wildfire dangers that are often underestimated and underinsured, according to a new September 2025 report by Jiayi Xu, a Realtor.com economist.

About 18 percent of homes, valued at nearly $8 trillion, face severe risk from hurricane winds. Another 6.1 percent of homes, worth $3.4 trillion, are exposed to extreme flooding risk, and approximately 5.6 percent, representing $3.2 trillion in value, are endangered by wildfires, according to the report.

As the cost of home insurance continues to soar, many insurers are retreating from high-risk areas, leaving homeowners with unaffordable premiums, high deductibles or, in some cases, scrambling to find any coverage at all. The growing financial toll of weather-related disasters is a threat to the broader real estate market, the report warns, as both insurers and property owners struggle to manage escalating climate risks.

“Understanding climate risk in the housing market is essential, as these challenges not only affect residential safety but also influence property values, insurance costs and overall market stability,” reports Xu.

As insurers boost the cost of home coverage, driven by weather-related losses and the escalating cost of rebuilding, some markets are seeing insurance ratios — meaning, the cost of insurance compared to the value of the home — at or exceeding 2 percent, the threshold for insurance to be considered unaffordable, Xu says.

The Miami and Fort Lauderdale metro area has the highest insurance burden, with a premium-to-value ratio of 3.7 percent. The median market value of homes in the region is $614,000, putting the premium for a typical home at $22,718.

Next is the New Orleans metro area, with a 3.6 percent ratio. Because the median market value of a home is much lower, at $231,328, the typical premium is $8,328. For homeowners in that region, that’s unaffordable, says Xu.

Also included in the top five metro areas carrying the biggest insurance burdens are: Cape Coral-Fort Myers, Florida, Oklahoma City, Oklahoma and Baton Rouge, Louisiana.

Flood risks are often underestimated

The ratio data doesn’t include flood insurance, which isn’t typically covered by standard home insurance policies and must be purchased separately. About two million homeowners face significant flood risks they may not know about because they are not in federally designated flood zones, the report said. Even in flood zones, the danger is often overlooked, with many homes lacking coverage.

Affordability issues are driving the insurance decisions of many homeowners, says Nova Dugan-Mezensky, a spokesperson with the Insurance Fairness Project in Washington D.C.

“As severe weather disasters become more frequent — and costly — the financial burden of home insurance is becoming a big affordability concern for people across the country,” Dugan-Mezensky says. “We need solutions to this escalating problem that don’t leave homeowners on the hook.”