What's Happening?
According to a new survey by Realtor.com, 75% of recent and prospective homebuyers in the U.S. are worried about the affordability of homeowners insurance as climate risks increase. The survey reveals that $12.7 trillion worth of homes are at risk from severe climate events, leading to higher insurance premiums. Nearly half of the respondents have faced or expect to face difficulties in obtaining or renewing insurance. Additionally, 88% anticipate paying more for insurance in the future, with 42% already experiencing cost increases. The survey also notes that 58% of buyers might forgo insurance if costs become prohibitive, with Gen Z buyers particularly affected.
Why It's Important?
The survey's findings highlight a critical issue for the housing market, as rising insurance costs could deter homeownership and affect property values, especially in high-risk areas. This situation poses challenges for both buyers and lenders, as insurance is often a prerequisite for securing a mortgage. The potential for unaffordable insurance could lead to increased financial risk for homeowners and impact the broader real estate market. The data suggests a need for strategic responses from policymakers and the insurance industry to address these challenges and ensure that insurance remains accessible and affordable.
What's Next?
As climate risks continue to impact insurance costs, homebuyers may need to adjust their search criteria, potentially avoiding high-risk areas. This shift could influence real estate trends and market dynamics. Policymakers and insurers may need to explore solutions such as enhancing climate resilience, revising insurance models, or providing financial assistance to maintain insurance affordability. The survey indicates a growing awareness among buyers, with many planning to consider natural disaster risks in future home purchases.
