Climate Change

The Devastating Effects of Climate Change on US Housing Security

April 9, 2021  • Taylor Gauthier & Financial Security Program

Climate-related disasters—floods, storms, droughts, and heatwaves—are on the rise and demand urgent attention. With 30 named storms, 2020 was the most active hurricane season on record. Wildfires also increased in 2020, forcing 100,000 people from their homes, and burning over 5 million acres in Washington, Oregon, and California. The total cost of natural disaster damages neared $50 billion in September 2020, already surpassing the total cost for all of 2019. By the end of 2020, there had been 22 separate billion-dollar climate-related disasters. One-third of all homes in the US are considered at high risk of a natural disaster, resulting in many homeowners bearing the brunt of costly repairs.

Communities affected by climate change are often impacted by multiple natural disasters in a relatively short period of time, destroying homes that often had just been rebuilt from the previous disaster. In fall 2020, two hurricanes hit Southwest Louisiana within a month of one another, affecting working-class residents the most. Homes that survived the high winds of the first hurricane were damaged by the flooding of the second, while some homes in rural areas were simply destroyed. The compounding effects of the pandemic have limited the amount of private aid and public assistance that has been available, thereby slowing the recovery. Two months later many families were still rebuilding, often living in rented trailers or tents as their homes are repaired by a limited supply of contractors.

As climate change intensifies, housing stability will be increasingly under threat. Housing is the primary determinant of people’s financial security and generational wealth in the US. Housing is also the largest expense for families, as more than 38 million US households live in housing that is not affordable to them. Unaffordable and insecure housing leaves families less able to cope with unexpected expenses such as extensive repairs or rebuilding from flooding or wildfires. Both the frequency and reoccurrence of climate-related disasters have exacerbated affordable housing crises in areas prone to disasters. Without significant intervention, areas prone to climate-related disasters will continue to face housing instability.

Households of color face disproportionate impacts of climate change and systemic inequities in federal assistance

While climate-related disasters have devastating effects on all families, Latinx and Black communities are experiencing a disproportionate amount of the damage. Households of color are more likely to live in a floodplain, exacerbating inequalities after a disaster strikes and making it harder for these communities to recover. A study published in Social Problems analyzed the changes in household wealth in counties with high damage from natural disasters, from 1999 to 2013. Over the 14-year period, they found that in high damage counties white wealth increased by an average of $126,000, compared to an average loss of $27,000 and $29,000 in wealth for Black and Latinx households, respectively. With white households’ accumulated wealth at 10 times that of an average Black household, the consistent and damaging occurrence of natural disasters is likely to contribute to increasing the racial wealth gap.

The disparities in wealth can be attributed partly to systemic disparities in disaster aid. Many homeowners face high damage minimums and complex application processes for federal assistance, which left out as many as two-thirds of low-income homeowners after Hurricane Harvey. Federal disaster assistance is based on appraised values of homes, making it difficult for low-income homeowners, who are disproportionately homeowners of color, to receive federal disaster assistance. The high property values in wealthy, and often majority white, neighborhoods also leads to them getting more assistance quicker. Homeowners of color already face systemic barriers to homeownership, and after disaster strikes, face barriers to receiving adequate relief to rebuild.

Families without the resources to move are disproportionately households of color, and they will be forced to face the continuing financial and psychological harms of climate disasters.  

Renters face additional burdens to receiving federal disaster aid, as the disaster relief minimums are often too high to encompass their loss of property. After Hurricane Sandy, 40% of damaged homes were renter-occupied, but renters only received 25% of the assistance. In addition, only 18% of renters who experienced damage due to Hurricanes Katrina or Rita received federal assistance, compared with 62% of homeowners. Renters face additional barriers, contending with higher rent prices and limited supplies of rental housing, making it difficult to find housing after a disaster. Renters are twice as likely to be households of color, making the disparities in disaster assistance for renters especially damaging for communities of color. Without adequate federal assistance, both homeowners and renters of color face significant barriers to recovering housing and financial stability after a natural disaster.  

Past and current discriminatory housing policies contribute to increased risk for households of color and threaten their ability to respond to climate change disasters

The legacy of discriminatory housing practices is having continuing effects on families of color, especially when faced with a natural disaster. Redlining practices have pushed communities of color into undesirable and often low-lying neighborhoods, which saw little public investment, leading to substandard sewer and drainage systems in these neighborhoods today. With the increase of climate change disasters, the underinvested and crumbling infrastructure of these neighborhoods are making them increasingly susceptible to disastrous flooding. This is not just a coastal issue, as 99% of US counties have experienced at least one flooding event in the last 25 years. While not usually considered at risk of climate-related disasters, flooding throughout the Midwest is projected to increase due to increased rainfall and more frequent downpours.

Chicago’s communities of color withstand some of the worst flooding. The First Street Foundation identified over 150,000 properties at risk of flooding, or 26% of Chicago’s properties, and the neighborhoods most at risk are previously redlined neighborhoods. A study by the Center for Neighborhood Technology in 2016 found that 87% of flood damage insurance claims over a 10-year period were in low- to moderate-income communities of color. Many factors contribute to these disproportionate effects including old and ineffective local infrastructure, aging housing stock susceptible to floodwater destruction, and limited open space for floodwaters to flow, stemming from years of redlining and underinvestment.

Redlining is having a continuing effect on communities of colors ability to respond to a climate disaster. An emerging practice, coined “blue-lining,” involves arbitrarily drawn boundaries around neighborhoods with increased environmental risk, often coinciding with previously redlined neighborhoods. The practice involves assessing neighborhoods for environmental risk leading to increased insurance and lending costs and already limited investments for flood or fire prevention to dwindle, furthering the cyclical decline of these neighborhoods.

Blue-lining practices have continuing implications on families’ ability to respond to a disaster. Because of the heightened environmental risk in blue-lined communities, property values in these neighborhoods are often less than surrounding communities, making it harder for homeowners to obtain insurance and disaster aid. Research shows that only about 30% of homeowners in Special Flood Hazard Areas are covered by flood insurance, and that homeowners of color are less likely to have insurance. Housing instability stemming from structural inequities that have yet to be comprehensively addressed and as natural disasters and flooding become more prevalent around the country, the road to recovery will be hard for already disinvested communities.

Localized housing solutions, in conjunction with adequate federal responses, will help communities build resiliency to better weather climate-related disasters  

In January, President Biden issued an executive order mandating that climate change be a priority in all of his administration’s foreign and domestic policymaking. The order recognizes the intersection of climate change damages and racial inequality—as well as the opportunity for solutions to be a driver of racial equity and environmental justice. Housing security is one of many aspects of financial security that will be threatened by climate change where federal policy can make a difference.

As natural disasters continue to get worse and more frequent, families will be forced to continually deal with the damage, repair and rebuild, or seek more stable housing elsewhere. Those who are forced to move will often face displacement and a loss of their stability and community, as well as a drain on their financial resources. Families without the financial resources to move are disproportionately low- and moderate-income households of color, and they will be forced to face the continuing financial and psychological harms of climate disasters.  

The issues and intersections of climate change-induced housing instability are complex, and there will be no silver bullet or quick fix to this issue. The Institute’s Financial Security Program has developed a housing solutions framework aimed at providing solutions for leaders of all types to strengthen housing security in their communities and nationwide. The framework provides several recommendations for climate-friendly housing preservation that can be undertaken by any level of government or stakeholder. For example, we recommend Fannie Mae and Freddie Mac increase investments in the preservation of both private-market and nonprofit-owned affordable housing. Housing preservation is more climate-friendly than building new housing, and Fannie Mae and Freddie Mac could include important climate and environmental justice considerations into their investment strategies, ensuring that homes are both affordable and climate-resilient. Incorporating climate resiliency and racial equity into preservation strategies and programs will ensure all families have access to safe and stable housing.

Neighborhood-based solutions can be effective in building resilient communities, but there is an essential role for all levels of government and stakeholders to play in improving housing stability to mitigate the impacts of climate change. Investing in America’s most vulnerable communities will work to reverse the effects of years of underinvestment and strengthen the resiliency of communities to respond to and withstand the devastating effects of climate-related disasters.

This piece is part of In Focus: Rising to the Climate Challenge, a multimedia informational campaign that draws on the expertise of Institute programs. We look at four main facets of the climate change issue—labor and the economy, youth and education, public health and safety, and communities. To get campaign updates and other news from the Aspen Institute in your inbox, sign up for our newsletter. 

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