Months after the deadly wildfires in Los Angeles earlier this year, price gouging in the wake of the disaster has led to officials in California cracking down on landlords. But skyrocketing housing prices in cities recovering from crippling climate catastrophe has become a pattern.

And that pattern is accentuating an existing global housing crisis. Fueled by widespread urbanization, investment companies snapping up real estate, as well as inflation and towering construction costs, accommodation has become unaffordable for many around the world.

"It's not a uniquely rural issue or urban issue, or homeowner's or renter's issue," said Sara McTarnaghan, a researcher at the Urban Institute, a US think tank focused on social policy. "There's a kind of shared experience where home prices and rents have continued to rise much quicker than income."

It's also a problem without geographic constraints. Half of the cities with the world's fastest rising rents are in the Global South. 

Escaping high-risk areas fuels inequality

Compounding the issue are extreme weather events and natural disasters such as hurricanes, flooding and wildfires which are becoming more intense and frequent as humans continue to burn fossil fuels.

Such disasters are changing the appeal of neighborhoods in at-risk regions. In coastal cities like Miami, the threat of hurricanes means real estate speculators are shifting their gaze away from beachfront properties, as sea levels rise as a result of warming global temperatures. 

"You have high-income folks on low-lying coastal areas that are vulnerable to flooding that are now looking to higher elevation areas," said Zac Taylor, climate finance expert at Delft University of Technology in the Netherlands. And this shift in investment patterns, he added, is "displacing those existing low-income residents." 

While waterfront properties in neighborhoods like Miami Beach remain popular, prices in lower income, inland areas like Little Haiti are rising faster than the rest of the city. Higher-elevation Miami real estate is some of the fastest appreciating in the US. Experts call this "climate gentrification."

"I've spoken with real estate developers who have told me that yes, they do think about elevation now when they buy long-term property for development," Taylor said. "So, we know that displacement pressure on those communities is being to some extent amplified by a concern about climate."

Post-disaster, housing becomes even more expensive

When disasters do strike, they can erode available housing stock and put short-term pressure on rental supply — sometimes in entirely different cities.

Los Angeles' deadly January wildfires wiped out 16,000 structures, many of which were homes, instantly impacting what was already one of the country's most expensive housing markets.

"We often think about success in disaster recovery as bringing back the housing units, but there's not a lot of visibility to whether that housing unit is affordable or still occupied by the same person," said McTarnaghan.

In New Orleans, housing prices jumped 33% in the wake of Hurricane Katrina in 2005. The storm caused $125 billion (€114 billion) in damages and killed 1,392 people. And housing costs in Puerto Rico rose 22% after Hurricane Maria hit in 2017.

Maria remains the deadliest hurricane in recent US history, killing nearly 3,000 people in Puerto Rico alone and causing roughly $90 billion in damages. Rebuilding efforts, redevelopment and radical post-disaster price increases changed entire neighborhoods.

Insurance costs for the more than 1.2 billion people around the world that are highly vulnerable to at least one critical climate hazard are also skyrocketing. 

In the US, annual average homeowners' insurance premiums nearly tripled from $536 to $1,411 between 2001 and 2021, largely due to the increased risk in disasters related to planetary heating.

In Germany, where floods are becoming increasingly frequent, home insurance premiums are predicted to double in the next decade. In Australia — frequently hit by wildfires and flooding — 15% of households experience "home insurance affordability stress," meaning they pay more than four weeks of their yearly income into premiums.

Ensuring affordability and climate resilience

McTarnaghan argues that more housing will help deal with surging demand post-disaster.

This flexibility would help people affected by disaster to benefit from "an increased housing supply that can better accommodate the shifts and surges that come with disasters," she said.

Expanding the housing stock would also generally provide more options for renters and homeowners, helping with housing's wider affordability crisis. Still, climate change presents unique challenges that cannot be solved through abundant stock alone.

"There's a really urgent need to transform our stock both to reduce its carbon footprint, but to also reduce physical vulnerability to climate risks," said McTarnaghan.

City planning that emphasizes shifting housing density toward low-risk areas could help. Additionally, climate-forward retrofitting like fire-resistant roofing or sturdy sidings in hurricane and typhoon prone regions can help to proof against disasters.

Zac Taylor argues risk reduction must be seen as part of a larger societal approach to housing affordability and engaging with climate change.

"We need a clearer vision of the society we want to live in. What do we want to protect and invest in? How important is safe and affordable housing? We need to think about this if we want to redesign our institutions to contend with these risks," he said.

Edited by: Tamsin Walker and Jennifer Collins

This story is part of The 89 Percent Project, an initiative of the global journalism collaboration Covering Climate Now.