Changes in habitat quality, including those caused by extreme events like droughts and floods, could alter costs and benefits of territoriality and thereby the prevalence and reproductive consequences for individuals capable of breeding that do not do so (floaters). We studied floating behavior in a population of Southwestern Willow Flycatchers (Empidonax traillii extimus) in central Arizona during one year of extreme drought, one year of lake inundation, and three years of near average precipitation. In all years, most floaters were second year (SY) males, and most subsequently settled outside of the patch where they were detected in the floating year, suggesting that floaters did not “queue” at high-quality territories in order to achieve higher reproductive success in subsequent years. Instead, cohorts that floated in non-drought years had lower apparent survival and lower reproductive success compared to territorial birds. In the extreme drought year, however, the number of floaters was 1.5 times greater than in all other years combined, more females floated, and apparent survival and mean annual productivity in subsequent years was higher for males that floated in that year than for those that were territorial. Inundation of habitat due to rising reservoir levels did not result in an increase in floaters because many birds nested in inundated areas where trees projected above the water so that the relative amount of available habitat was not reduced to the extent habitat models predicted. Overall, our results indicate that the prevalence and reproductive and demographic consequences of floating can change under extreme climatic events like severe drought.