According to a report released by the American real estate information platform Zillow in June, home insurance premiums in the United States have soared by 38% since 2019, nearly double the median homeowner income growth rate of 22%.
Zillow points out that in the largest metropolitan areas, typical homeowners’ insurance premiums range from $1,200 to $4,000 annually, accounting for about 2% of household income. The average premium has increased by about $500 per year since 2019.
However, Zillow also noted significant differences among major markets in the United States. For example, in Boston, premiums have increased by 14% since 2019, adding $267 annually, while in Miami during the same period, premiums have risen by 57%, an increase of $1,478.
The report found that areas with the fastest rising premiums tend to be in regions with relatively higher climate risks.
Miami has seen the highest increase in premiums since 2019 nationwide, followed by Sacramento in California, Jacksonville in Florida, and Richmond in Virginia.
These regions all face significant weather risks: Miami, Jacksonville, and Richmond primarily face threats of strong winds, while Sacramento faces severe wildfire risks.
Zillow predicts that in certain markets, the rise in premiums will have a greater impact on housing affordability.
In New Orleans, for example, where 84% of residences face serious flood risks and almost all homes are at risk of extreme weather disasters, a 30% increase in premiums could result in a decrease of over 12% in affordable housing units.
In Oklahoma City, about 25% of homes face severe wildfire risks. A 30% increase in premiums could lead to a nearly 11% reduction in affordable housing.
However, the situation is not as severe when considering the entire United States. Zillow adds that even with a 30% increase in premiums, the overall inventory of affordable housing in the country would only decrease by about 1%.
This regional disparity is also evident in another report. A report released on January 15 by the Federal Insurance Office under the U.S. Department of the Treasury indicated that homeowners in communities affected by “severe weather events” generally pay higher premiums.
The report revealed that from 2018 to 2022, households in the top 20% of postal code areas with the highest climate risk in the United States paid an average annual premium of $2,321, 82% higher than those in the lowest 20% risk areas.
Sharon Cornelissen, Director of Housing Affairs at the Consumer Federation of America, warned on April 1 that the skyrocketing home insurance premiums are worsening the housing crisis in places like Salt Lake City and New Orleans, putting pressure on homeowners nationwide.
She stated, “If we want to protect affordable housing choices, federal and state policymakers must take action to curb rising costs and reduce risks for individuals and communities.”
The rise in home insurance premiums poses a threat to the housing market. It increases monthly homeownership expenses and may cause potential buyers to postpone their housing plans.
This phenomenon also impacts real estate developers, especially those building affordable housing. Insurance is necessary from construction to ongoing property management, and the overall increase in costs may deter developers.
A report released by LendingTree on March 17 indicated that approximately 11.3 million homes in the United States are uninsured, equivalent to one in every seven homes nationwide. New Mexico has the highest percentage of uninsured homes, followed by West Virginia and Mississippi.
Rob Bhatt, a home insurance expert at LendingTree, expressed surprise at these figures. He stated that insurance has become very expensive and even difficult to obtain in some areas, putting many families at risk of losing everything in the event of a disaster. For some, it has become a dilemma—whether to continue paying utility bills and providing for their families or to pay insurance premiums. It is indeed a challenging choice.