Published by FOX Business | April 24, 2024
Rising home insurance rates are crushing U.S. families
The astronomic rise in mortgage rates and spike in home prices over the past year have pushed a key tenet of the American dream out of reach for millions of families.
Now, there is another obstacle to homeownership: higher home insurance premiums.
The average cost of home insurance for a $300,000 property in the U.S. surged 12% in 2023 to roughly $1,770 per year, according to recent data published by Insurify, an insurance comparison website headquartered in Massachusetts.
That is noticeably faster than the 2.8% increase in the consumer price index recorded during that same time period.
“As a recurring cost of owning a home, albeit a relatively smaller component, surging insurance premiums could add extra cost burdens on many households in this high borrowing cost environment,” Freddie Mac economists wrote in a recent blog post about the matter.
Freddie Mac data shows the average annual home insurance premium was $1,081 in 2018 among borrowers living in a single-family home with a conventional 30-year mortgage. By 2023, that had jumped to $1,522 – a more than 40% increase from just five years ago.
The problem may soon get worse.
Insurify predicts that the cost of home insurance will keep growing, with average premiums in the U.S. likely to hit a record high of $2,552 by the end of 2024. That would mark a whopping 44% increase from the previous year.
Researchers have blamed the skyrocketing prices on a number of factors, including weather disasters, rising re-insurance rates and steep home repairs as inflation pushes the cost of building materials higher.
Home insurance is even more expensive in states plagued by severe weather and other climate-related catastrophes. As the frequency and severity of destructive weather events have increased, more areas are considered high risk and unprofitable for insurance companies.
