5 Cities Where Climate Change Will Cost Homeowners Big-Time

As risk goes up, so will homeowners insurance costs.

It's scary to think about, but human-created climate change is shaping our world, and as time goes on, we will see more and more effects of it on our everyday lives. This extends to homeownership, and the costs homeowners will incur from higher homeowners insurance rates and potential damage from changing weather conditions will be significant. Recent research from The Ascent notes that, based on data from Swiss Re, the world's largest reinsurer, home insurance premiums could increase by 5.3% every year through 2040.

In reading the list below, you may wonder about the risk to your own housing and insurance costs if you live in a region not discussed here. Parts of the Northwest, Midwest, and Northeast could be less susceptible to issues resulting from drought and sea-level rise, but these areas are heating up as average temperatures increase.

I live in a part of the country with very cold and snowy winters, and where central air conditioning is uncommon in older homes (unless it was added later). This is because, as older residents will tell you, it was never needed in the past. It's certainly helpful for safety and comfort now, and as I get my financial ducks in a row to buy a home in the next few years, I intend to prioritize looking for a home with central air conditioning, due to climate change. And I am also deliberately planning to buy a home in a more climate-change stable area, rather than the following five cities.

1. Houston, Texas

Houston and surrounding Texas coastal areas are at major risk from flooding due to hurricanes and proximity to the Gulf of Mexico. Hurricane Harvey's devastation in August 2017 caused an estimated $125 billion in damages, per NOAA. What's more, the nonprofit organization Here in Houston notes that the heaviest rains have increased 167% since the 1950s in this area, and that rainfall has fewer places to go as natural surfaces are paved over as urbanization increases.

2. Phoenix, Arizona

Phoenix and similar Southwest cities are facing increasing problems due to higher temperatures and a loss of water. The area is already extremely prone to drought, and drought impacts the water sources the region relies upon, including the Colorado River basin. A whopping 90% of the population in the Southwest lives in cities, which act as "heat islands" because pavement and buildings retain heat. Life without air conditioning in Phoenix will become increasingly difficult, putting the most vulnerable populations at health risk.

3. New Orleans, Louisiana

Most people who were around in 2005 likely remember the devastation of Hurricane Katrina on the city of New Orleans and surrounding areas. Research from the EPA notes that Katrina caused around $134 billion in damage -- and more than 1,800 lives were lost to Hurricanes Katrina and Rita. New Orleans is also vulnerable to sea level rise due to land sinking and loss of wetlands.

4. Los Angeles, California

Thanks to climate change, Los Angeles is experiencing a perfect storm of drought, heat waves, and wildfires: a scary combination indeed. Wildfires in particular are making life extremely difficult for city residents. A University of Southern California research survey found that 50% of those surveyed avoided going outside at some point in 2021 due to air quality issues stemming from wildfire smoke (and this number was up from 30% in 2020).

5. Miami, Florida

Miami is another coastal city in trouble due to sea level rise and more devastating hurricanes, but it's positioned on the Atlantic coast. However, the risks here are no less severe than on the Gulf Coast, and according to research from the City of Miami, heavier rainfall and higher seasonal tides will make life more difficult and expensive for residents. By 2030, sea level is projected to rise six to 10 inches higher than recorded 1992 mean levels.

If you currently live in one of these five metro areas, you may want to start padding your emergency fund now to cover future increasing costs. Or you might want to look into moving to a new area where you can both afford to buy a house and more easily weather climate change.