The Price of a Home Isn’t the Whole Story: How Climate Risk Can Affect Homeownership Costs

When buying a home, most buyers focus first on the purchase price and mortgage rate. But to understand whether a home will remain affordable over time, it’s also important to consider insurance, HOA fees, maintenance, and potential repair costs. Climate-related risks can affect the real cost of owning a home.

According to a 2026 Realtor.com report, about 23.1% of U.S. homes, representing approximately $11.2 trillion in housing value, face severe or extreme risk from at least one of the following: wind, flooding, or wildfires. One important point is that the financial impact can increase even before a disaster occurs.

Don’t Forget Insurance and HOA Costs

The Realtor.com report found that homes exposed to severe or extreme climate risks had a median monthly HOA fee of $192, which was $67 higher than homes with relatively lower levels of risk. That amounts to an $804 annual difference. However, this is a nationwide comparison and does not mean that climate risk alone caused the difference in HOA fees.

Two homes with the same purchase price can have very different monthly costs depending on insurance premiums and HOA fees. For condos and townhomes, buyers should also review the association’s insurance coverage, reserve funds, planned projects, and potential special assessments.

Saving on Insurance Could Mean Taking on More Risk

According to the report, the number of active policies under the National Flood Insurance Program (NFIP) declined by approximately 170,000 between May 2025 and May 2026. The report identifies rising premiums as one factor behind the decline.

Reducing insurance coverage may lower your immediate expenses, but it can leave you responsible for much larger costs if damage occurs. Before purchasing a home, buyers should obtain an insurance quote for the specific property and review the coverage limits and deductibles.

What Does This Mean for the Chicago Suburbs?

For buyers in Chicago and the surrounding suburbs, it’s important to look beyond the neighborhood name and evaluate the individual property.

During an inspection, pay attention to the home’s history of basement flooding, drainage, sump pump and backup systems, roof condition, and other potential maintenance concerns. It’s also worth discussing appropriate coverage with an insurance professional.

For sellers, keeping records of roof replacements, drainage improvements, and major repairs can help buyers better understand the condition of the property and its potential future maintenance costs.

A Good Home Is One You Can Afford to Maintain

Even with a fixed-rate mortgage, your insurance, HOA fees, and maintenance costs are not necessarily fixed.

When comparing homes, look beyond the purchase price and consider the total cost of ownership over time.

If you’re planning to buy or sell in Chicago or the surrounding suburbs, contact Chicago Realtor Sang Han. We can look beyond price and location to help you understand the practical costs and considerations associated with a property.

Chicago Realtor | Sang Han