March 24, 2025
Climate change is emerging as the most significant threat to America’s real estate market and, consequently, the broader financial system. Senator Sheldon Whitehouse has become a leading voice in the Senate, drawing attention to the urgent need for action. He has delivered over 290 Senate speeches, titled “Time to Wake Up,” to address the urgency of the climate crisis and the inaction of Congress.
During a Senate confirmation hearing for a Trump administration appointee, Senator Whitehouse emphasized the severe economic consequences of climate change. He pointed out that major property insurers are withdrawing coverage from certain regions and increasing rates in others, making homeownership unaffordable for some.
Senator Whitehouse highlighted that decades ago, scientists, including those at Exxon, accurately predicted that fossil fuel emissions would cause climate change. However, the Senator noted that Congress has failed to act due to intense pressure from fossil fuel interests, including “the largest campaign of disinformation that America has ever seen.” This has resulted in the suppression of bipartisan efforts to address climate change on Capitol Hill.
As the senator and the Trump appointee discussed in a meeting beforehand in the senator’s office, the consequences of climate change are severe based upon professional risk judgement where fiduciary responsibly is considered. For example, the chief economist of Freddie Mac told committee hearings we are headed for a “property insurance collapse” that will cascade into a crash in coastal property values that will be so significant that it will cascade into the entire economy, same as 2008. That’s the warning on coastal properties.
Recently, the Financial Stability Board, which advises the international banking system, issued a warning that property insurance now poses a substantial risk to economic stability. Similarly, a recent bipartisan report from the Congressional Budget Office (CBO) identified fires, floods, and climate change as threats to the financial system. Despite this, Congress has largely ignored these warnings. The Economist magazine’s April 2024 cover story also depicted climate damage undermining insurance markets and threatening real estate. Senator Whitehouse stated, “The lie that climate change is a hoax is no longer just an act of political malfeasance. It is now an act of economic malfeasance.”
Numerous reports and studies underscore the severity of the issue. These include:
- U.S. Department of the Treasury Report: Homeowners Insurance Costs Rising, Availability Declining as Climate-Related Events Take Their Toll, January 16, 2025.
- Climate Risk Will Take Trillion-dollar Bite Out of America’s Real Estate, Report Finds, USA Today, Feb. 7, 2025.
- Insurers Are Deserting Homeowners as Climate Shocks Worsen, The New York Times, Dec. 18, 2024.
- Climate Change Is Coming for U.S. Property Prices, Heatmap News, Feb. 3, 2025.
- Climate Change to Wipe Away $1.5 Trillion in U.S. Home Values, Study Says, The Wall Street Journal, Feb. 3, 2025.
These reports predict significant devaluation of property due to climate change, potentially threatening the stability of the housing market and the broader economy.
The core question going forward is whether the massive devaluation of real estate due to climate change, which affects every American household, will cripple the economy.
Robert Hunziker lives in Los Angeles and can be reached at [email protected].
