HousingWireHousingWire
American homeowners are struggling to keep up with unpredictable natural disasters and the rising homeowners insurance premiums that follow them.
Residents are more willing to move if it means avoiding high insurance rates, according to a new study from mortgage technology company Maxwell. And one state stands out among the rest in terms of risk.
“It’s clear: Homeowners insurance and taxes are taking up an increasing share of a family’s monthly housing cost,” Maxwell co-founder and CEO John Paasonen said in the report.
“Our survey highlights that people are worried — they’re asking how they can afford to stay in their home, even if they have a low mortgage rate, given so much uncertainty about climate and policy changes that drive these huge monthly budget increases.”
Maxwell’s report, released on Thursday, explores the impact of rising homeownership costs on the American dream. The company surveyed 1,200 people who have at least two years of homeownership history. Homeowner ages ranged from 18 to 55.
According to the report, 57% of respondents would strongly consider moving altogether to avoid high insurance premiums and property taxes. This includes 43% who were planning a move in the next five years. Another 14% plan to relocate immediately to avoid financial strain.
Nearly 50% of homeowners worry about their ability to afford a home as taxes and insurance premiums rise. This stems from increases to homeowners insurance premiums, with nearly 44% of respondents reporting a 10% to 20% increase, according to the report.
Homeowner Anthony Ianni, a Colorado resident, shared his experience in the survey and echoed the feelings of several other respondents.
“The monthly premium for our homeowners insurance recently increased by 42%,” he said. “When we moved here 9 years ago, we paid under $1,000 annually. Now, we’re close to $6,500, and the insurance won’t pay for the true replacement cost of the house should something happen.
“As rates continue to rise and carriers leave the state due to wildfire risk, we feel an increased push to look out-of-state to more insurable areas.”
Rising premiums are causing some homeowners to actively pursue other insurance options or forego homeowners insurance altogether. Nationwide, 5% of homeowners don’t have an insurance policy. Among that share, 44% deemed homeowners insurance to be overly expensive. And 8% had their policies cancelled due to delinquent payments.
Certain states stood out in terms of insurance coverage worries. More than 90% of California residents surveyed reported higher premiums, and 57% of homeowners there had concerns about insurance coverage, according to Maxwell. That’s more than double the national average of 23%. This largely stems from the Los Angeles wildfires, which 75% of respondents cited as a major worry.
California has experienced significant hikes in homeowners insurance premiums. For example, State Farm has requested a 22% rate increase in an emergency letter to state officials, although that request was initially denied. Another provider, Mercury General, plans to increase rates by 12% in March, which impacts about 579,000 homeowners in the state.
