An uptick in natural disasters and rebuilding costs could lead to homeowners being hit with insurance premiums going up another 16% over the next two years, Fox Business reported.
The report by Fox said that real estate analytics firm Cotality projected that the average homeowner insurance premium is expected to rise 8% in 2026, followed by another 8% in 2027.
John Rogers, Cotality’s Chief Data and Analytics Officer, said at a conference that those premiums have been “rising dramatically” over the last few years, with some areas experiencing double-digit growth. He said that insurance now accounts for 9% of the typical U.S. homeowner’s payment.
That is the “highest average on record of a person’s outlay in terms of principal, interest, property tax, and insurance premiums,” Rogers said.
Higher Rebuilding Costs Drive Increases
Danielle Hale, Chief Economist at Realtor.com, told FOX Business that the higher cost of rebuilding, a reflection of both overall inflation and some housing supply-chain specific trends, is the driving force behind the higher premiums.
Hale also said that “more frequent disasters have resulted in more damage and increasing claims, trends insurers are trying to get ahead of.”
Hale said that Realtor.com research revealed that a “significant chunk of the U.S. housing stock” faces severe or extreme climate risk, ranging from more than 6% for flooding, 18% for wind risk, and 6% for wildfire.
According to Hale, trillions of dollars worth of real estate are exposed to significant risk.
Citing a September report, Realtor.com said that coastal markets dominate the list of metropolitan areas that have the highest dollar value of homes exposed to severe or extreme flood risk. The Miami–Fort Lauderdale–West Palm Beach, Florida, market ranks first.
Roughly $306.8 billion in total home value is at risk, the report said, representing 23.2% of the area’s total housing value.
Fox Business said that the rise in cost could further hinder buyers in an already stagnant housing market. It said that many potential buyers have been pushed to the sidelines by a lingering affordability crisis, as high interest rates and rising housing costs have made it difficult for people to move.
Hannah Jones, Senior Economic Research Analyst at Realtor.com, said in a recent report that a rise in premiums could discourage potential buyers who are trying to estimate their monthly housing expenses, Fox reported.
“In both cases, climbing insurance costs can contribute to weaker buyer demand and more fragile housing stability in already vulnerable markets,” Jones said.
