As we write, millions of Americans are enduring exceptional hardship. CNN's latest update at 12:44 PM EST on Monday, January 26, 2026, reports:
- 12 tragic deaths
- 700,000 people without power
- 19,000 flight cancellations
- Countless schools closed or switched to remote learning
- 18 states with snowfall of at least one foot
Of much less immediate concern to most people is the impact of bad weather on mortgage applications, and the long-term effect that repeated incidents have on home values. But they're worth considering.
Extreme Weather and Mortgage Processing
Most large mortgage lenders have plans in place to mitigate the effects of extreme weather events. They may have back-up generators, for example.
Of course, generators have limited value when employees can't get into the office. However, they can help keep the IT infrastructure in place while staff work from home. Things get more complicated when those employees have no power at home.
It's reasonable to expect the mortgage application process to slow down during such times, but, with luck, it might not grind to a complete halt.
Things are different for tasks performed out of the office. Since the pandemic, many lenders allow desktop appraisals in most cases. That means an appraiser can value a home remotely, using Street View, agents' photos and videos, floor plans, local listings, and public records without visiting the home. But if a lender wants an in-person appraisal, the transaction will be delayed until one is practical.
Meanwhile, home inspections have to be made on site, so outstanding ones will be delayed until the extreme weather event recedes. An inspector can't be expected to travel through deep snow or floods. And, even if they could, there would be little point while crawl spaces and the like are inaccessible.
Another source of delay might be closing. True, the pandemic showed that remote closings are possible. But that relies on everyone having power, internet access, and a willingness to engage.
Extreme Weather and Home Values
Monday's New York Times warned of "a looming economic crisis that few people are talking about, and most citizens are not even aware of: a housing market collapse driven by increasingly devastating natural disasters."
Meanwhile, NewsNation reported in September, "About 18% of homes face potential hurricane wind damage, the most common risk, while 6% are threatened by flooding and another 6% by wildfires." That's 30% of all homes in America, although there may be some double-counting of those with multiple risks.
"Freddie Mac’s former chief economist has warned that rising sea levels and flooding could hit insurance and mortgage markets with an economic shock akin to the 2008 financial crisis," continued The Times' article. "That coastal risk now has an evil twin in the growing threat of Western wildfires, such as those we saw last year in Los Angeles. A major economic hit is coming at us, caused by these disasters."
Homeowners Insurance
Americans may not yet fully perceive the threat to home values posed by increasing extreme weather events. But plenty are already acutely aware of their impact on homeowners insurance premiums.
Realtor.com uses premium-to-market value ratios to identify those most affected. This is the percentage of a home's market value that must be paid annually to insure the property.
It found Miami to have the highest ratio at 3.7%. "In other words, a family owning a home with the median market value of $614,000 would be on the hook for $22,718 in insurance premiums every year under an HO-3 home insurance policy — the most common type of single-family homeowners insurance policy in the U.S.," said Realtor.com.
Of the 10 housing markets with the highest premium-to-market value ratios, five were in Florida. However, the No. 2 slot was occupied by New Orleans. In those parts of Los Angeles with the highest risks of wildfires, some homes are virtually uninsurable. The consequences of extreme weather events drive all these.
Homeowners insurance is one of the factors in play when calculating a mortgage applicant's debt-to-income (DTI) ratio. So, it already affects how much someone can borrow. And, in markets where it's especially high, it's bound to have a limiting effect on home values.
We can hope that The Times' warning of "an economic shock akin to the 2008 financial crisis" is wrong. Economists frequently are. But frequent extreme weather events are already having a real impact on many places across the country.
