More Housing or More Sustainable Housing? It’s a False Choice—Let’s Do Both!

Housing operating expenses across the country have soared over the past decade. Utility costs—electricity, gas, water, and sewer—have gone up dramatically and are projected to continue increasing due to aging infrastructure and added pressure from new data center demand. Recent data compiled from Ohio illustrates the significant increases in expenses over the past decade. As this data shows, increases in expenses have significantly outpaced inflation, and for properties with mortgages, they have outpaced the growth rate assumption typically underwritten for the mortgage—meaning that over the long term, operating income on income properties will shrink, cutting into profit margins or worse, putting the financial security of underlying mortgages and the properties themselves at viability risk. For homeowners, rapidly rising costs for utilities and insurance cut into discretionary income and household budgets for other needs. And for renters, high utility costs exacerbate unaffordable housing; more than 26 percent of Ohio renters are already rent-burdened, spending at least half of their income on rent.

Over the past 10 years in Ohio, combined utility costs have grown a total of 65 percent, compared to CPI inflation of 39 percent over the same period. This sharp and widening divergence between anticipated versus actual operating expenses is not a sustainable business model. Cost increases impact all housing but most acutely affordable housing and low- and moderate-income households, where operating margins are narrower and the energy burden is higher.

Climate change is already driving an increased frequency and intensity of extreme weather events—hurricanes, wildfires, floods, and extreme heat. The insurance industry has the most sophisticated data on past and current risks, as well as projected future risks as our temperatures increase and sea levels rise. Insurers raising premiums—we have seen double-digit increases in recent years—and pulling out of some markets entirely are warning signs of what that well-informed industry believes is coming. 

Following our 2026 report An Uninsurable Country, NRDC released a corresponding resource, the state insurability map. The map evaluates homeowners’ insurance availability and affordability and identifies early signals of stress in insurance markets, recognizing that insurability challenges typically emerge gradually as climate risks intensify and insurers respond by adjusting pricing, coverage, and underwriting practices. 

Even FEMA tells us that we are not building appropriate resilience into our new housing: Using a system called Building Code Adoption Tracking, FEMA “tracks the building code adoption status for state, local, Tribal, and territorial governments across the nation to evaluate several important aspects of a community’s natural hazard risks and building code adoption,” i.e., FEMA scores building code adequacy at the local level against the increasing natural hazards to which that location is vulnerable. The results?  

• As of Q3 2026, 35% of natural hazard-prone jurisdictions have adopted current hazard-resistant building codes. When analyzing adoption status by the percentage of the population living in natural hazard-resistant jurisdictions: 50%—or 167.3 million—of the population is covered.  

It is stunning and unacceptable that a mere 35 percent of the country’s municipalities or 50 percent of the population resides in locations where the housing built today will be able to withstand the increasingly unnatural disasters to which those locations may be subjected, according to the agency that knows property damage risks best.

Increasing utility and insurance costs—especially when added to steeply rising health-care costs, mortgage rates, and prices of gasoline and groceries—are straining family budgets in Ohio and beyond. The stability and financial sustainability of housing, and affordable housing in particular, are threatened when operating expenses cannot be managed and when short-term cost cutting prevails over a longer-term, more holistic view of affordability.  

To mitigate rising utility costs, there is a better way: Build more energy- and water-efficient housing, thereby minimizing vulnerability to fast-rising and volatile costs going forward. The building technologies, methods, materials, equipment, and appliances are all readily available in the market today. Efficient building standards are widely proven and adopted, including Passive House, LEED, and Enterprise Green Communities Criteria.  

To mitigate skyrocketing insurance costs, resilience-focused building standards such as FORTIFIED can reduce risk and therefore premiums. The technology exists and is readily available today. States have responded by requiring the insurance industry to offer premium discounts in many locations for properties built to a higher resilience standard, such as in Alabama and Louisiana. Expect this model to spread to more of the country. 

Renters and homebuyers are increasingly asking for, and making decisions in part on, the energy efficiency and utility costs of properties, as well as the resilience and safety of prospective homes. Lenders, investors, and insurers are demanding this information as part of their due diligence and underwriting procedures, leading to the rapid growth in the availability and use of climate risk modeling from firms such as First Street. Large real estate platforms such as Redfin have added data on the efficiency and risk profiles of properties on its site. The market has woken up to the impact of efficiency and resilience on the desirability and value of properties. 

Too often, we hear that developing housing to above-code sustainability standards is too expensive; that there is a significant green premium for greater efficiency and resilience. Even when stronger standards modestly increase up-front costs, those costs must be weighed against lower utility bills, reduced exposure to insurance volatility, avoided disaster losses, improved health and comfort, and stronger long-term asset performance. The answer is not to weaken quality standards in the name of speed or cost but to align standards, incentives, financing, and approvals so that high-performing homes can be built faster and at scale. 

Data shows that when planned from the beginning, new multifamily housing is a nominal 1 to 4 percent more expensive to build to Passive House, a very sustainable standard, when compared to code-minimum construction. Further, this better-quality, more durable housing can be financed by banking and insurance industries that increasingly recognize the long-term value proposition of sustainable buildings. Community Development Financial Institutions (CDFIs)—a growing network of state and local green banks, insurers, and other financial institutions—are focused on leveraging and delivering affordable capital to sustainable projects. 

Building and retrofitting housing to strong energy-efficient and climate resilience standards can serve as a hedge against rising energy and insurance/disaster recovery costs, respectively. A more efficient property is less susceptible to utility cost fluctuations while a more resilient, extreme weather–ready home will have fewer losses and potentially lower premiums than the average property. A more efficient and resilient home is safer, healthier, more affordable, and more secure for the renter or homeowner—and increasingly more appealing to financial institutions for lending and underwriting.  

Cities play a catalytic role in promoting sustainable housing. Regulatory reform—including land use, zoning, and streamlining of permitting—contributes to increased housing production. But building standards endure, defining and shaping the conditions of the homes we’ll live in for generations. It is said that building codes define the worst building we’re allowed to build. Let’s ensure that the worst building is really good. Rolling back energy efficiency requirements for the sugar rush of short-term affordability gains is a shortsighted strategy that will lock in burdens for homeowners and renters, with high utility costs for the decades-long life of the home. 

Cities can leverage existing authorities and programs to promote efficiency and resilience standards, including: 

• Using public land and land banks to require or incentivize efficient, resilient housing
• Attaching standards to housing trust funds, bonds, and subsidies so that public dollars produce long-term affordability
• Offering density bonuses, tax abatements, expedited permitting, and preapproved plans for projects that meet performance standards
• Coordinating with utilities, green banks, CDFIs, and insurers to reduce up-front costs and reward lower long-term risk
• Adopting modern energy and resilience codes or stretch codes with incentives, so today’s housing remains safe, affordable, and insurable for decades

NRDC can help the housing field do three things: define affordability over the full life of the home; identify the policies and financing tools that reduce operating and climate-related costs; and help cities turn climate-ready housing goals into investable project pipelines. We will continue to partner with other organizations in the housing ecosystem to develop evidence-based research, convene housing stakeholders, and engage communities. And we will advocate for capital deployment, financing strategies and products, project development pipelines, and solutions via statutory, regulatory, and utility policies and programs that reduce energy and insurance burden and expand housing opportunities through efficient, resilient housing nationwide. 

Where, what, and how we build will have impacts on our communities, as well as the homeowners and renters of those homes, for decades. Will the housing we build today be long-term assets to the community and its residents—or liabilities?  

America needs millions more homes. But if those homes are expensive to heat and cool, vulnerable to disasters, difficult to insure, and costly to maintain, they will not solve the affordability crisis for long. Building better is not a distraction from housing abundance. It is how abundance becomes durable, affordable, and just.