Recent, Prospective Homebuyers Concerned About Homeowners Insurance

Half face or expect to face trouble obtaining and renewing insurance, with some saying that they could forgo homeowners insurance altogether

As more than one in four homes in the U.S. — representing $12.7 trillion in real estate value — risk exposure to severe or extreme climate risks, nearly half of recent and prospective homebuyers have faced trouble or expect to face trouble obtaining or renewing homeowners insurance, according to a recent Realtor.com survey. Eighty-eight percent of those surveyed believe that they will pay for more homeowners insurance in the future and 42 percent have already confirmed they have experienced a rise in home insurance costs. Notably, 75% believe homeowners insurance could ultimately become unaffordable.According to the survey, 58% of recent and prospective homebuyers said they would or are likely to forgo homeowners insurance if the costs became too high — a decision some have already made. This increases to 76% among Gen Z buyers, even though many of these young buyers are using a mortgage and therefore likely required to have homeowners insurance. And 65% of those surveyed are worried about obtaining and maintaining their homeowners insurance."Homeowners insurance offers financial protection for consumers that may help cover damage to homes and personal property from an extreme weather event or fire, while also providing personal property and liability coverage," said Realtor.com Chief Economist Danielle Hale. "But these benefits come with an upfront cost that has risen as weather events have become more frequent and impactful and rebuilding costs climb. Homeowners are looking for strategies to lower costs including adjusting their home searches and potentially short-charging or forgoing coverage altogether."According to the survey's findings, insurance challenges have forced one third (33.7%) of home searchers to completely change the geographic area where they are looking for a home and another 30% have cast a wider net and expanded their initial target geography. Nearly one quarter of home searchers have completely changed strategies based on insurance challenges.Additionally, just 30% have looked into the natural disaster risk data for their home or prospective homes, though 44% plan to do so in the future.Gen Z home searchers are more likely to have taken some type of action in their search to potentially mitigate against homeowners insurance challenges compared to other generations, especially Baby Boomers who said that only 6% had completely changed their homebuying strategy and only 15% had expanded their initial search. According to a recent Realtor.com report, 26% — representing $12.7 trillion in value — of U.S. homes face severe climate risks including flooding, wildfire or hurricane wind damage. These severe climate risks result in higher insurance premiums for homeowners, amplifying the financial strain on homeowners in high-risk areas. For single-family homeowners under a HO-3 policy, the most common type of homeowners insurance policy in the U.S., in Miami the typical homeowner now pays annual premiums equal to 3.7% of the home's market value — the highest ratio among the nation's 100 largest metros.

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