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s climate disasters intensify across the US, high-net-worth buyers are reassessing their real estate investments to mitigate environmental risks. This shift is forcing lenders, developers, and agents in the luxury market to adapt.

    The record-breaking $128.2 billion in weather-related damages in 2024 has triggered a fundamental change in the luxury real estate landscape. Neighborhoods once considered safe havens are now grappling with increased threats from wildfires, flooding, hurricanes, and extreme heat. In Los Angeles, areas like Pacific Palisades and Altadena are facing significant wildfire risks, with estimated property damage and capital losses totaling $76 billion to $131 billion.

    In response, homeowners and developers are embracing climate-conscious design, incorporating fire-resistant materials, resilient landscaping, and smart-home systems to protect against extreme weather. This trend is not limited to California; nearly 45% of US homes worth an estimated $22 trillion are at risk of severe damage from environmental hazards like wildfires, floods, and heatwaves.

    Mortgage professionals are feeling the impact, particularly in areas where insurance markets have become unstable. In Colorado, wildfires are no longer a seasonal concern but a persistent threat, driving up insurance premiums and causing some insurers to stop writing new policies altogether. This has led to collapsed deals as lenders struggle to secure adequate insurance for homes.

    "We've got to have that thing insured," said Justin Smith, senior mortgage banker at Cornerstone Home Lending. "That home represents our collateral for the loan." Without adequate insurance, lenders can't approve financing, and deals fall apart. Real estate agents in high-risk regions are now seeing deals collapse due to buyers' inability to secure insurance.