Fannie Mae: Extreme weather threatens housing affordability

Survey links rising insurance costs and climate-related disasters

Fannie Mae: Extreme weather threatens housing affordability

A recent Fannie Mae survey revealed growing anxiety among homeowners and renters about the impact of extreme weather events on their homes and its potential financial consequences.

Fannie’s National Housing Survey (NHS) analyzed responses from consumer concerns related to various weather events, including extreme heat, strong winds (from hurricanes and tornadoes), drought, wildfires, and flooding.

Across the country, consumers were most worried about extreme heat (24%) and strong winds from tornadoes and hurricanes (23%). Around a quarter reported experiencing weather damage to their current home.

“As expected, geographic location has a significant influence on the weather-related events that are of greatest concern to consumers,” Kevin Tillmann, Fannie Mae market research senior associate, and Saif Amin, senior director of climate impact strategy, wrote in a blog post. “Strong winds are the biggest concern in the Northeast, Midwest, and South, while extreme heat is the biggest concern in the West.”

For insured homeowners, 66% said such events have impacted their home insurance premiums. Two-thirds have also taken preventive measures to reduce damage risk.

When it comes to assessing the risk of weather-related damage, homeowners rely on a mix of sources.  Insurance agents top the list (40%), followed by the Federal Emergency Management Agency (FEMA, 35%).  Interestingly, friends and family come in third (32%), demonstrating the role of personal networks in information sharing on this topic.

The relevance of these findings is underscored by alarming data from the National Oceanic and Atmospheric Administration (NOAA). NOAA reports that 2023 saw a record-shattering number of billion-dollar-plus weather and climate disasters across the United States.

Read more: What's more important than ever in the mortgage industry?

As billion-dollar disasters become more frequent, their impact on housing costs and the need for effective risk mitigation loom as critical challenges for the industry and policymakers.

“These disasters impact housing costs, and significant work remains to be done to raise awareness on the topic, particularly about the affordability challenges facing homeowners and renters,” Fannie Mae stated. “We believe highlighting these issues, like the affordability of insurance and the assorted precautionary measures consumers can take to minimize damage and protect their homes, is key to ensuring housing stability.”

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