On the hunt for housing affordability, prospective buyers grapple with a tangle of rising homeownership costs, from high home prices and mortgage rates to rising property taxes.
In recent years, the cost of homeowners insurance — required for mortgage borrowers with federally backed home loans — has skyrocketed. In July, it rose to nearly 10% of average monthly mortgage payments inclusive of principal, interest, taxes and insurance.
Those rising insurance costs have played an outsized role in rising homeownership expenses, averaging 70% growth nationally over the past five years, compared to 23% in principal, 27% growth in interest and 27% growth in property taxes.
Drivers of insurance cost increases are myriad, from increasingly frequent, severe and costly extreme weather events to the rising expenses for construction labor and materials.
In markets where the cost of doing business has exceeded insurers’ ability to charge premiums that cover the risk, insurers have reduced coverage or exited markets altogether, with notable insurer withdrawals in Florida and California in recent years.
Altogether, what used to be a “check the box” aspect of the homebuying process has begun to influence home shoppers’ behaviors as insurance availability and price pressures become more embedded in assessments of affordable homeownership.
Eighty-eight percent of those recently surveyed by Realtor.com believe they will pay more for homeowners insurance in the future, with 42% reporting that they have already experienced a rise in home insurance costs.
Since 2022, premiums for new policies have increased 45% nationally through the first half of 2025, according to Matic, a digital insurance marketplace. Coverage A — the portion of homeowners insurance polices that covers repairs or rebuilding if a house is damaged — has only risen 12%, “suggesting policyholders may be receiving less coverage value relative to their premium costs,” a recent Matic report shows.
With 65% of Realtor.com respondents reporting worry about obtaining and maintaining their homeowners insurance, cover gaps could become a more systemic problem, leaving homeowners’ and lenders exposed after complete losses. Just 30% of respondents report having reviewed natural disaster risk data for their prospective home purchase, however.
Nearly one-third of respondents to a poll conducted by Redfin in the wake of last October’s Hurricane Helene reported that seeing the storm’s devastation made them reconsider where to live, compared to 15% of respondents age 35 and older.
Perceptions and impacts of rising insurance costs varied greatly across age groups, the Realtor.com survey also revealed.
Thirty-percent of prospective Gen Z-homebuyers report having completely changed their homebuying strategy based on insurance challenges, compared to 5.9% of baby boomer home shoppers. Conversely, 18.5% of Gen Z respondents say rising home insurance costs have had no impact on their shopping strategy, but expect it will in the future, while 32.2% of baby boomers feel the same.
Roughly one-third of Gen Z, Gen Y (millennial) and Gen X respondents report insurance challenges leading to expanded initial target geographies for their home purchases, while more than a quarter of Gen Z, Gen Y, Gen X and baby boomer respondents report insurance challenges have eliminated some desired locations.
