Building for Insurability, Resilience, Energy Efficiency, and Housing Affordability: Addressing the True Cost of Housing

Housing affordability and family economic security remain critically pressing issues nationwide. Too often, however, housing supply strategies overlook long-term costs including insurance, natural disaster exposure, maintenance, and utilities. These costs affect the long-term affordability of homes for families, and constrain new supply. As extreme weather increases in intensity and frequency across the U.S., and insurance and utility expenses demand a larger fraction of household costs, state and local governments have been implementing innovative solutions to holistically address affordability, resiliency, and insurability to both increase new housing supply and preserve existing housing. Cost-effective, common-sense construction methods that make buildings more energy efficient, stronger, and better able to withstand extreme weather often work in synergy, multiplying co-benefits. Such measures also improve insurability, prevent deaths in extreme heat, increase resiliency of the electric grid, extend housing durability, and lower emissions and energy costs.

This set of tools addresses the true cost of housing in a changing climate and how housing retrofits and resiliency upgrades, as well as codes and standards for new housing, can reduce long-term costs for residents and bolster insurance and mortgage markets to grow and preserve housing supply.

The Challenge This Tool Solves

Every year, the U.S. loses the equivalent of one month’s worth of new homes to climate disasters and an additional 350,000 homes to disrepair. In 2024, property damage from climate disasters reached $182.7 billion, and in the past five years, home insurance premiums have increased by 61%. The insurance industry is increasingly unable to cover new risks, not just in disaster zones but across entire regions or states. In February 2025, Federal Reserve Chair Jerome Powell testified before the Senate that “if you fast-forward 10 or 15 years, there are going to be regions of the country where you can’t get a mortgage, because of climate change.” As Accelerator for America outlined in “Insuring the Future of Our Communities,” Local and state leaders, in collaboration with the federal government and insurance industry, must take proactive steps to make sure places across the country do not become “insurance deserts,” with no or limited affordable coverage options available to residents and businesses.

Types of Communities That Could Use This Tool

All communities could benefit from programs to improve the resilience and expected lifespan of their housing stock as extreme weather becomes more frequent across the country. In particular, coastal towns vulnerable to hurricanes and storm surges, wildfire-prone areas, and regions facing frequent flooding or heatwaves that may be exacerbated by climate change will benefit. Low-income and historically underserved neighborhoods can especially benefit, as such communities tend to be located in areas of greatest physical risk and residents often lack the resources to invest in protective measures or recover quickly after disasters, or may be unable to afford insurance premiums unless upfront investments in resilience are made. Furthermore, rural communities with limited access to emergency services also stand to gain significantly. Making homes more resilient protects lives and property and promotes the long-term stability of families and homes in those communities.

Expected Impacts of This Tool

Tens of thousands of homes have already been built and retrofitted to common-sense standards, because the economics of lower energy costs and resilience work over the long run. Estimates suggest that every $1 invested in meeting modern building codes provides $11 in savings by reducing storm damage. The following policies and programs are designed to create a long-term, affordable housing supply nationwide, even amidst growing challenges from extreme weather events and high insurance and utility costs. When effectively implemented, these tools can help reduce housing costs, extend the longevity of the housing supply, and strengthen resilience, ultimately minimizing the risk to lives and property.

Key Policy Levers Available to States and Localities

No single solution can address these complex and critical challenges. State and local policymakers can deploy multiple tools and levers to support household affordability and resilience to boost long-term housing supply. By doing so, communities will have more housing and be less financially impacted by changing utility and insurance rates and extreme weather events. The proposed solutions require innovation and leadership at the local and state levels.

States and localities can increase housing supply that is insurable, resilient, energy efficient, and low emissions by:

• Incentivizing Energy Efficient Resilient Housing Construction and Rehabilitation: Incentivizing energy-efficient, resilient housing construction by promoting standards that exceed minimum building and energy codes, making buildings stronger, more disaster -resilient, and more energy-efficient. Incentives include density bonuses, tax abatements, expedited permitting, utility programs, low-cost surplus land access, streamlined approvals for proven high-performance designs, low-cost loans through revolving funds, and integration of resilience and energy cost saving measures into housing ballot initiatives.
• Requiring Current Building and Energy Codes: For new construction and major renovations, require current building and energy codes as a base and consider requiring stretch codes with higher performance requirements for stronger homes and deeper energy savings and emissions reductions.
• Preventing New Construction in Risk-Prone Locations and Requiring Mitigation and Resiliency in Areas with Greatest Risk: States and localities, for example, can adopt the former Federal Flood Risk Management Standard to reduce vulnerability to loss of life and property caused by flooding by avoiding construction in flood zones and building in a way to prevent future flood damage such as elevating the home above the flood zone. Local governments can co-invest in infrastructure to support broader neighborhood resilience, such as water management and flood mitigation strategies integrated between the development and surrounding infrastructure.
• Incentivizing Building Hardening Programs: This includes programs like the Insurance Institute for Business and Home Safety’s FORTIFIED certification, which protects homes from hurricanes and hail, and the Wildfire Prepared Home to protect homes from wildfire.
• Incentivizing Weatherization, Electrification, and Onsite and Community Solar: Through expedited permitting and reviews, public land transfers, and programs funded locally through bonds, tax credits,tax abatements, rebates, or utility programs, this can cut existing home energy costs, act as a hedge against rising energy costs, improve grid reliability and resilience, and save lives during extreme heat.
• Creating Housing Near Transit and Right-Sized Housing: Upzoning, infill, mixed use as-of-right zoning, and lifting minimum building and lot size requirements can lower daily transportation costs for residents and make homes more affordable and easier to heat and cool. Cities like Cleveland have created transit oriented development standards and policy tools to enable this work.

Together, these levers lower families’ annual housing costs nationwide, while protecting their home investment. Further, these solutions decrease the likelihood of catastrophic damage to new and existing homes, which changes the odds of insurance risk pools in ways that stabilize the market. State and local governments can be proactive by requiring and incentivizing building codes and standards that make new and existing homes stronger and better able to withstand climate disasters. For new construction and major retrofits, building codes are the number one recommendation of the insurance industry and FEMA to reduce loss from climate disasters and are seen by the current Treasury Department as critical for any future Federal insurance backstop. Yet most of the country doesn’t require or incentivize them. Other standards, such as the Insurance Institute for Business and Home Safety’s FORTIFIED certification can be applied on existing housing — a strategy that has worked in Alabama, which bolstered its insurance industry and made families safer by requiring building codes in high-risk counties and incentivizing FORTIFIED roofs to protect homes from hurricanes.

These case studies illuminate how cities, states, and localities are implementing solutions using the key levers identified above. These approaches reduce costs, stabilize insurance markets, lower annual utility and maintenance expenses for families, and increase needed housing stock while improving existing housing quality.

Resilient Housing Retrofit Programs

Communities developing resilient housing programs should consider the following actions:

Understand Funding Landscape: Federal, state, and utility funding can be key to these programs. Understanding the available federal and state funds for your program as well as any philanthropic opportunities is an important first step.

Take Stock of Housing Age and Retrofit Needs: Understanding the landscape of local housing will help shape the type of program needed. Determining the age, common retrofit needs, mix of multi-family and single-family housing, as well as rental stock will help identify relevant case studies and develop program focus.

Build Coalitions Between Housing and Sustainability Professionals: Local leaders play critical roles in breaking down silos across climate, housing and economic development sectors to help implement solutions outlined in this policy guide. This can also help identify where there are gaps in skills needed to implement solutions and build the demand and programs to meet those needs.

Catalog Region-Specific Solutions: Leaning on the specific weather and risks in your region will be important to creating an effective program. Reaching out to community organizations to understand challenges and looking at past city programs can help identify the suite of solutions needed.

Identify Partners: Many of the case studies highlighted work with community organizations as well as developers, contractors, and others to improve effectiveness. Leveraging community expertise will help build a successful program that can seamlessly integrate with ongoing work.

Serve as a Hub for Your Residents: Programs supporting existing housing are only as useful as people’s ability to use them effectively. It’s critical that local governments create, or support the creation of, programs that provide support for stacking existing home upgrade programs available within your city through state, federal, utility, and city incentives and programs.

Invest in Workforce Development: Finding contractors capable of installing upgrades like EV chargers and heat pumps can be challenging. Growing the workforce through certifications, community college programs, and other workforce development programs can create jobs and increase overall economic benefits of a retrofit program.

Pursue Opportunities for Scalability to Reduce Cost: As cities work to meet their new housing and retrofit goals, implementing resilience and energy efficiency requirements and upgrades at scale will reduce per-unit costs.

Kate Wright and Laura Jay serve as the Executive Director and Deputy Director of Climate Mayors, a bipartisan network of 350 mayors across the U.S. who are demonstrating climate leadership through meaningful actions in their communities. Heather Clark oversaw building sector climate policy for the Biden-Harris White House. Heather comes from a background in affordable housing where as a developer she pioneered some of the most ambitious decarbonization and clean energy projects in the country to benefit underserved communities Lotte Schlegel is an independent consultant working at the intersection of climate, housing, finance, and community. She has worked on building and energy policy in the nonprofit, government, and business sectors for 20 years.