Last month is contending to be the hottest month on record in the U.S. With temperatures routinely in the three digits in parts of the country that normally don’t hit that mark, and averaging 2.5 degrees above normal.
These temperatures not only threaten lives but also increase the likelihood of wildfires, shut down parts of the economy, and put added pressure on home insurance and mortgages.
Global property data company, Cotality, is working experiments to bring new insights on geospatial heat maps that will have a future fit for home design. Right now, it’s involved in a partnership to use satellite instrumentation to measure heat at the ground level, with one objective of delivering new learnings for the 2028 Olympics in Los Angeles. Insights will help determine where to put shade trees and how to manage the heat trappings of artificial turf.
There also are implications for those building homes–where and how heat impacts them on the job site and safety and insurance measures that could be improved.
“Seniors are the most impacted by heat—we have seen significant amounts of death related to that,” said Dr. Howard Botts, chief scientist at Cotality. “Senior living or similarly, university dorms or jails, prisons, understanding what heat means for the existing building stock and what do we have to do to make things more livable.”
Los Angeles County requires apartments to stay at or below 82 degrees, which can be accomplished by air conditioning or passive design methods.
As the heat index for many cities in the U.S. increases in number of days and intensity, there are other implications that are impacting housing.
Yet, there is more to consider.
“Heat is implicit in everything,” Botts said. “That has two major impacts – one is increased flash flooding and intense rainfall events, that water has to come from somewhere like soil or plant moisture. That causes more vegetation stress, and that leads to wildfire stress. Extended heat domes also are causing all kinds of human health impacts.”
While these time specific climate risks can cause major damage, so can the slow burn of more humidity in a home--for every increase of 1 degree C, the air can hold 7% more water, causing mold growth, warped wood, peeling paint and rusting metal. And, while some of these issues can be just cosmetic, some can lead to major health consequences for residents—from asthma to brain fog and fatigue.
As programs are getting smarter, there are proactive solutions, but there still are unknowns, along with major economic impacts.
Now cities, regulators and companies are sounding the alarm about the escalating costs of heat waves, which cause tens of billions of dollars in damage each year.
Insurance for heat is nonexistent for the most part and is becoming more difficult to obtain for secondary impacts of heat stress, like wildfires.
In California, after the Palisades fires tragedy, the state’s FAIR Plan Policy received exponentially more customers. As an insurer of last resort, it’s meant to be used if homeowners cannot obtain coverage in the traditional insurance market, as a temporary solution.
“The number of FAIR plan subscribers in the last two to three years has increased dramatically, creating strains on affordability,” said Paul Gaspar, head of forensic meteorology, hazard and climate science at Cotality. “In San Diego County, the number quadrupled—going from 9,500 to 37,000 in 2024.”
Accident attorneys, Sweet James, just published research showing that through October 2026, FAIR Plan premiums will rise by around 29% on average. Some homeowners will face increases of more than 50%.
This has consequences. For one, homeowners are not being renewed on their policies as insurers determine new risk rates. On top of that, renewals are seeing rates increase up to 36%. Gaspar says the state is also working to approve those rate increase requests and set up catastrophe models that can set rates that help insurers quantify the losses. Another consequence is that people are leaving.
Nonrenewals are growing between 2 to 10 times in some areas of the country, and it isn’t just in the most hazardous areas, as this map from consumer advocacy organization, Public Citizen, demonstrates.
At the same time, the homes in more vulnerable areas are decreasing in value.
“High insurance, and no insurance, dramatically reduce home values,” said Toni Moss, CEO at AmeriCatalyst LLC in a recent presentation. “For example, the average home in California that receives a non-renewal could instantly lose 12 to 39% of its value.”
Cotality is one of several firms working across a number of research organizations, insurers and other stakeholders to develop meaningful mitigation that can then have a productive impact on reducing insurance premiums. For example, in coastal places like Alabama and Louisiana, more wind resistant roofs are getting discounts.
“Anecdotally, my insurance went from $2,700 to $14,800 per year—a $12,000 increase in one year,” Botts said of his home that was impacted by the Palisades wildfire. “California has made an attempt with top items that you can do to your house to reduce a premium by about 1%, so it’s not meaningful.”
California’s wildfire mitigation program has demonstrated and validated home hardening for wildfires. The Firewise program led by the National Fire Protection Association, offers a structured approach for communities to improve wildfire resilience that requires vegetation removal, which also requires inspections that are hard to fund and upkeep.
“We’re starting to hear a lot about HOAs that have power to enforce requirements and they are changing rule sets to create community wide resilience,” Gaspar said.
It’s all at added costs that homeowners have to take into consideration. Increased HOA costs and home improvements expenses that barely reduce escalating insurance prices…but that could save the whole home from burning to the ground.
Green Builder Media’s COGNITION Smart Data shows that the biggest factor stopping homeowners from investing in resilient upgrades is taking on the upfront cost with more than 41% of respondents citing it as a blocker.
Where and how can these models evolve?
As the industry is rushing to provide better information and better risk models to price insurance accurately, housing stakeholders are standing by to determine the impacts to their business.
“How climate change impacts our industry the most surrounds the challenges of pricing in climate risk, which, for the most part, has not been factored into the underwriting or house price equation,” Moss said.
Everyone is motivated to make change. Climate risk data company, First Street, estimated that home foreclosures from climate events in 2025 could add up to more than $1.2 billion in losses for U.S. banks, roughly 6.7% of all foreclosure credit losses, and that direct damage and rising insurance premiums could push it to $5.4 billion by 2035.
While mortgages are federally regulated, insurance is handled at a state level, but the two cannot be separated. Insurance is a critical risk management tool that actually enables the extension of credit, and while insurance is renewed on an annual basis, mortgages stretch 15 or 30 years into the future, with unknown climate risks and unstable climate predictions. Insurance has to be repriced regularly to absorb changing risks.
Being repriced on an annual basis means steady increases that drive up premiums and also push some insurers out of markets where they cannot remain profitable. For homeowners, it’s putting a dollar sign on safety and protection. In some places, where insurance is still offered, some cannot afford a mortgage along with rising insurance premiums.
Moss is seeing these dynamics trigger banks and mortgage companies to get into the business of home insurance solutions.
Rising housing costs are pushing people into more dangerous climate areas where the property values are dropping due to climate risk.
“What has been interesting in recent years, a lot of the growth has occurred in high-risk areas,” Gaspar said. “The cost of housing may be low, but the cost of insuring and maintaining that housing stock will increase.”
COGNITION Smart Data reports that only 16% of Boomers and 22% of Gen Xers say climate events have impacted their ability to get insurance for their homes, which increases sharply to 66% and 77% for Millennials and Gen Z respectively.
Among other factors, this dramatic generational divide shows that younger buyers are relocating to more affordable secondary and tertiary markets that frequently carry higher climate risks. This situation puts additional pressure on the buyer to get insurance and a mortgage.
As Moss explains it, mortgage lending is offered for a homeowner to gain leverage, but after increasing property taxes and insurance, the homeowner is gradually de-levered, especially in declining markets.
“Furthermore, as the full weight of risk transfers down from the federal level to state to city to community to neighborhood to the homeowner, the risk disproportionately hits the weakest link: the homeowner,” she said. “They are the most vulnerable to catastrophic risks—hurricanes, fire, flood, running out of water…the things that homeowners can’t anticipate, can’t control, even if they can continue to afford property and casualty insurance.”
If the current programs and systems continue, only the wealthy will be able to afford to be insured, and large parts of the U.S. will not only be uninsurable, but unmortgageable at any price.
Moss envisions a better world, where these home services are able to operationalize empathy, and where the service of human caring will be the largest differentiator of any company. And, insurance will feel like protection again.
Author’s Note: Please note that the author maintains a professional contract with a PR agency that represents Cotality. The data and companies cited in this article were included solely for illustrative and informational purposes.
Publisher’s Note: This content is made possible by our Today’s Homeowner Campaign Sponsor: ProVia.
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