A new report from climate analytics firm First Street warns that climate change-driven risks could erase more than $1 trillion in U.S. real estate value by 2055. The study highlights how extreme weather events, rising insurance costs, and shifting migration patterns are reshaping the housing market.

The report, titled Property Prices in Peril, categorizes neighborhoods based on their vulnerability and economic resilience. It identifies five key categories: climate abandonment (areas with declining populations due to high climate risk and insurance premiums), risky growth (regions where climate risks are high, but people continue to move in due to economic factors), climate resilient (places that attract residents because of lower risks), tipping points (areas on the verge of depopulation due to climate threats), and economically driven decline (regions losing residents for reasons unrelated to climate).

Among the most vulnerable locations, major metropolitan areas in the Sun Belt, including Tampa, Miami, and New Orleans, face significant property value declines. Tampa, for example, could see home prices drop by as much as 25% in the next three decades. Risky growth areas, such as certain Texas metros, are projected to experience an average 1.7% decline in property values, while climate abandonment zones are expected to see losses averaging 6.2%.

"We definitely track all five different categories in historic patterns," said Jeremy Porter, head of climate implications research at First Street. "I think we are seeing an increased rate of response to climate exposure, and I think a lot of it has to do with just the point that we're at right now in time where we're having more frequent, more severe climate exposure events."

The report also underscores a growing climate migration trend, projecting that 55 million Americans could relocate to lower-risk areas by 2055. As soon as 2025, around 5.2 million people are expected to move due to climate-related concerns. Northern states such as Wisconsin, Montana, and parts of the Northeast could see population gains as residents seek safer environments.

Notably, climate risk exposure is often hyperlocal rather than affecting entire regions equally. While some neighborhoods within a high-risk metro area may be vulnerable, others remain desirable due to stronger infrastructure, school quality, or economic opportunities. Porter noted, "What we see is within cities, people want to live around their family. They want to have the same job, they want the kids to go to the same schools. But they're trying to find places that are relatively less risky in those metro areas."

Rising insurance premiums are a major factor in these migration patterns. First Street estimates that risk-based insurance pricing, if fully implemented, could drive a 29.4% increase in average premiums by 2055. This includes an 18.4% correction for current underpricing and an additional 11% increase tied to worsening climate risks.

The report identifies Miami, Jacksonville, Tampa, New Orleans, and Sacramento as the metro areas likely to experience the steepest premium increases. Recent wildfires in California, which resulted in an estimated $20 billion to $30 billion in insured losses, have further fueled concerns over rising costs and how insurers assess climate risk.

While First Street's findings are based on peer-reviewed climate and economic models, the report itself has not been peer-reviewed, and its projections come with uncertainties. Porter acknowledged that adaptation measures such as stricter building codes, seawalls, and improved infrastructure could mitigate losses. Additionally, the models do not account for inflation or broader economic shifts that could influence housing values independently of climate risks.