How do residential real estate markets value large-scale climate policies? We study how Germany’s coal phase-out affects residential property values near decommissioned power plants. Combining detailed residential property listing data from 2007 to 2023 with the staggered timing of plant closures, we estimate dynamic spatial DiD models. Nearby residential property values decline by 8.2%, implying aggregate homeowner wealth losses of approximately €1.9 billion. To distinguish economic from environmental adjustment, we examine changes in employment, population, purchasing power, and air pollution. Declines in population, employment and purchasing power coincide with falling residential property values, whereas improvements in air quality do not seem to offset these losses. Our findings show that residential real estate markets primarily capitalize the deterioration of local economic fundamentals rather than improvements in environmental quality, implying that climate policy generates substantial localized household wealth effects through residential real estate markets – a distributional channel that complements conventional evaluations focused on aggregate environmental benefits and macroeconomic adjustment.