Homeowners Aren’t Fleeing High-Risk Cities—Just the Neighborhoods Most Exposed to Extreme Weather

Climate change is often depicted as a macro disaster: a hurricane swallowing a city, a wildfire sweeping across an entire state, or a storm surge wiping out a skyline of skycrapers in a single blow. But the real story is unfolding at a much smaller scale: street by street, block by block.

What’s actually reshaping home values isn’t a sudden exodus from high-risk cities. People aren’t abandoning Miami, Houston, or New York; they can’t. These places remain economic powerhouses, and that gravity keeps workers and businesses firmly rooted. More than half of global GDP is concentrated in the cities facing the highest levels of acute climate risk, according to a new report from First Street.

Instead, the shifts are happening within these cities. As flooding becomes more routine, as insurers drop customers or raise premiums, and as deductibles and surcharges stack up, families are quietly, even subconsciously, recalculating where they can afford staying put. The result is a new kind of migration: one that pushes buyers not to safer metros, but to safer parts of the same metro.

But the forces that are keeping these households in place may not hold forever. Already, in roughly 30% of global cities, First Street finds that climate risk now outweighs the local economic advantages that once kept people there. 

In the U.S., that risk is starting to be priced into insurance markets and is slowly trickling down into buyer expectations.

“Climate has just become one of those things that layers into [the homebuying] approach … just like poor school scores or poor walkability,” Dr. Jeremy Porter, chief economist at First Street, explains. For many buyers, climate risk is now yet another filter—one that shifts demand away from the blocks that feel vulnerable, and toward the ones that still feel safe.

The ‘climate abandonment’ neighborhood effect

In many parts of the country, the early signs of “climate abandonment” are already showing up. 

“There are like climate abandonment neighborhoods where people are leaving. Homes are getting boarded up. The city is tearing them down. There's water in the streets three or four times a year,” says Porter.

That risk is expected to grow. A February analysis by First Street estimates that, by 2055, 84% of all census tract neighborhoods will experience some form of negative property value impacts from climate risk, totalling $1.47 trillion in losses from insurance pressures or lost demand.

What drives this pattern—at least at first—isn’t a wholesale flight from high-risk metros. It’s intracity migration. 

“People are responding to that through this proxy desirability,” Porter explains. “They'll move to a part of the city that has very similar amenities … but has a much lower flood score or something like that.”

While we are in the very early stages of this migration now, the movement triggers a predictable economic chain reaction. As demand drains from vulnerable blocks, local tax revenues fall, commercial activity weakens, and reinvestment stalls, accelerating decline in precisely the places least equipped to withstand it. Once underway, it becomes a difficult cycle to reverse.

And importantly, this is happening within markets, not across them, Porter noted.

These micro-migrations are the earliest and clearest signal that climate risk is already being priced into housing. Safer pockets of a city hold their value—even thrive—while riskier ones see slowing demand and early depreciation.

Why buyers are still moving to high-risk cities

For all the signs of strain in the most exposed markets, people are still moving into many of the cities facing the highest risk. Miami, Houston, New York, Los Angeles, and other coastal hubs continue to draw new residents, push rents higher, and post strong home-price growth, even as insurance premiums rise and extreme-weather impacts intensify. 

The reason is straightforward: Economic opportunity still outweighs climate risk in many of the very places most exposed to it. As the First Street report notes, “Over 52% of global GDP lies in the top 25th percentile of acute climate risk.” The world’s most vulnerable cities are also its most economically dynamic.

That dynamism is especially visible in New York City. Despite repeated hurricane impacts, chronic flooding, and rising insurance pressure, the population continues to grow. 

“People continue to come to New York City, continue to pay more rent … primarily because New York City has a strong innate capacity to adapt to the risks that exist at the market level,” says Porter.

But that balance has limits. Once economic strength no longer fully counteracts climate exposure, demand begins to shift. And that transition is already underway across the country.

A tale of two cities: Miami and New Orleans

Miami embodies the paradox of climate risk and housing resilience. It remains one of the nation’s most climate-exposed major metros, yet demand across much of the region is still strong. 

While prices are down nearly 4% for the city as whole year over year, according to Realtor.com® data, the luxury market is thriving. Of the 152,000 homes listed for $1 million or more in the U.S., 11,000 are in Miami. 

So, what keeps the wealthy buying and selling homes there? Since 2001, Miami’s GDP has grown at more than twice the global average rate and nearly four times faster than the U.S. average, First Street’s report found, despite ranking in the 99th percentile globally for climate risk exposure.

If Miami illustrates the early stage of climate pressure inside a still-growing metro, New Orleans shows what happens when those pressures overwhelm a city’s economic strengths. 

First Street’s analysis identifies New Orleans as the most climate-stressed major city in the U.S., with the deepest negative resilience spread at -10.3% today. 

Jasmina Buresch, a senior economist at First Street, put it bluntly: “New Orleans is the worst city we actually track globally, as far as its relative resilience to climate risk today. [It’s] a major city that ranks just really highly, not only in the U.S. in terms of its negative effects, but also globally.”

In New Orleans, the dynamics Miami is only beginning to experience are already entrenched. Chronic flooding, insurance instability, and persistent out-migration have converged into a feedback loop of declining demand. And today, home prices are down almost 7% year over year, according to data from Realtor.com.

The 30-year mortgage problem

For many homeowners, climate risk may still feel distant: something that may only matter decades from now. But researchers warn that this timeline aligns almost perfectly with a standard 30-year mortgage. 

As Buresch put it, “We are estimating that, in 30 years, people will start to really feel those effects more.” So, while homebuyers may think they have time, the clock on climate impacts matches the clock on their mortgage, underlining foreclosure risk.

In a separate analysis from May, First Street found that foreclosures across the U.S. caused by flooding, wind, and other weather-related incidents could soar 380% over the next 10 years. And by 2035, climate-driven events could account for up to 30% of all foreclosures.

And according to Porter, “We're at the very beginning of this actually starting to happen. Where it's happening right now is really within market. I think in the long term, we are going to see a cross market movement that starts to increase. ”