Rising home insurance prices are affecting homeowners across the country, but some states are feeling the pain more than others.
In Florida, 20% of homeowners pay at least $4,000 a year for home insurance, the highest percentage of any state, according to new data released by the U.S. Census Bureau on Thursday.
Other states where at least 10% of homeowners pay more than $4,000 a year are Louisiana, Texas and Colorado, according to data from the 2023 American Community Survey.
Nationally, the average cost of home insurance for a policy with a coverage limit of $300,000 is about $2,300 a year, according to Bankrate. Rates have risen nationwide, which experts say is due to inflation in the cost of building materials and an increase in weather and climate-related disasters.
In recent years, many insurance carriers have paid more in claims than they have collected in premiums. They have responded by raising their rates and reducing their coverage, especially in areas prone to extreme weather and wildfires.
Higher premiums can make it harder for homeowners at the edge of their affordability range to meet their monthly mortgage payment obligations.
A recent study found that executives in the default servicing space see rising taxes and insurance costs as the biggest risk factor for rising mortgage delinquencies.
“Still high home prices and high mortgage rates mean that financing a home purchase is still out of reach for many potential buyers,” says Realtor.com® senior economic research analyst. Hannah Jones. “High insurance premiums only add to this cost, forcing buyers in these markets to either stay away or settle for a lower-priced home.”
Nationally, home insurance rates increased 34% from 2018 to 2023, according to S&P Global Market Intelligence.
Texas saw the biggest increase, with premiums jumping 60%, followed by Colorado, Arizona and Utah.
If insurance rates continue to rise, that could eventually affect home prices in the most expensive areas to insure, Jones says.
“The monthly cost of home ownership includes not only paying the principal and interest on a loan, but also covering taxes and insurance. This means that the whole picture, including insurance costs, must be considered when setting a budget for a home purchase,” says Jones.
“Markets with high insurance costs may see downward pressure on home prices as buyers look to offset insurance costs by buying lower-priced homes, prompting sellers to increase demand at lower prices,” she adds. .
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