Extreme weather losses for U.S. homeowners are projected to climb sharply by 2050, report finds

Financial losses tied to extreme weather are expected to rise sharply across the U.S. housing market in the coming years, according to a report released Wednesday by Cotality, a property data and analytics company.

The report examines which states are most vulnerable to extreme weather and calculates the financial toll, which already runs into the billions of dollars in 30 states, along with how those losses are projected to grow by 2050.

"When people think of extreme weather, they usually think of places like California, Texas and Florida, but the most severe concentrations of risk aren't always where you'd expect," said Dr. Howard Botts, chief scientist at Cotality.

Flooding and hurricanes are expected to drive the largest share of losses nationwide in the coming decades, the report found. At the same time, insurers are raising premiums and, in some cases, pulling out of high-risk markets entirely, leaving some homeowners more exposed.

Using a risk-scoring model that measures the severity and likelihood of extreme-weather perils, Cotality ranked Louisiana as the state where homes are most exposed to severe storms. The state, long familiar with destruction on the scale of Hurricane Katrina, already sees $6.7 billion in average annual losses, mostly from hurricanes. By 2050, that figure is projected to climb to $11.4 billion, driven largely by increased inland flooding.

Mississippi and Florida rank as the next two most vulnerable states because of their hurricane exposure. Total housing market losses from extreme weather in those states are expected to grow by roughly 62% and 54%, respectively, by 2050. Residents of states far from the coasts, including West Virginia, are also likely to face a mounting toll from inland flooding, the analysis found.

The gap between the riskiest and safest states is narrower than many might assume. Cotality estimates the 10 least-exposed states will see weather-related losses rise nearly 38% by 2050, compared with about 47% in the 10 riskiest states.

"It's important to remember that 'low risk' doesn't mean 'no risk'," Botts said. "Every state has its own mix of perils and resilience, but wherever a state lands in our ranking, weather losses are projected to rise."

In raw dollar terms, California and Texas currently lead the nation in weather-related losses, averaging $18.2 billion and $11.5 billion a year, respectively. By 2050, those annual losses are projected to reach $22.4 billion in California and $16.5 billion in Texas.

Other research points to the same trend. A report released earlier this year by climate risk modeling firm First Street found that short-duration, high-impact weather events have produced $794 billion in total insurance payouts over the last 25 years, more than flooding, earthquakes and drought losses combined.