Priced out, Risked in: Housing Affordability and Climate Vulnerability for New Homebuyers

Climate change and its associated effects are rapidly emerging as key drivers shaping the U.S. housing market. Prospective buyers not only face traditional challenges of finding affordable housing in desirable locations but also must contend with the growing threats posed by climate change. This study investigates the evolving relationship between housing affordability, race/ethnicity, socioeconomic vulnerability, and exposure to natural disaster risks among homebuyers in the United States. New homebuyers, who are almost by definition economically vulnerable as they deploy significant resources for their initial purchase, also represent a cohort making decisions based on current market conditions and environmental realities. However, additional factors may heighten vulnerability for some, such as race/ethnicity, debt, loan type, and income relative to the Metropolitan Statistical Area (MSA). Building on previous research, I examine how rising home prices over time may be pushing economically vulnerable and minority homebuyers into areas with greater natural disaster risks. I draw on longitudinal data on property, mortgage, and homebuyer characteristics from the Home Mortgage Disclosure Act (HMDA), combined with data from the U.S. Census and the Federal Emergency Management Agency (FEMA)'s National Risk Index to examine how economic vulnerabilities and community characteristics are associated with natural disaster risk exposure over time. Preliminary findings suggest that as housing affordability decreases in lower-risk areas, economically vulnerable homebuyers—particularly those from minority groups—are increasingly purchasing properties in communities with greater climate change risk. This research highlights the compounding nature of social and environmental vulnerabilities in the housing market, emphasizing the need for integrated housing and climate adaptation policies to address both affordability and climate resilience for impacted homeowners and communities.