Realtor.com Survey Reveals 75% of Homebuyers Fear Unaffordable Insurance Due to Climate Risks

What's Happening?

A recent survey conducted by Realtor.com highlights significant concerns among U.S. homebuyers regarding the affordability of homeowners insurance. The survey reveals that nearly half of recent and prospective homebuyers have faced or expect to face challenges in obtaining or renewing insurance due to severe climate risks affecting $12.7 trillion worth of real estate. The survey indicates that 75% of respondents believe homeowners insurance could become unaffordable, with 58% considering forgoing insurance if costs rise further. Gen Z buyers, who often require insurance due to mortgage obligations, are particularly affected, with 76% expressing willingness to forgo insurance under high costs. The survey also notes that insurance challenges have led 33.7% of home searchers to change their geographic search area, while 30% have expanded their search.

Why It's Important?

The findings underscore the growing impact of climate change on the housing market and insurance industry. As extreme weather events become more frequent, insurance premiums are rising, placing financial strain on homeowners, especially in high-risk areas. This trend could lead to increased vulnerability for homeowners who opt to forgo insurance, potentially exacerbating financial losses from climate-related damages. The survey highlights the need for strategic adjustments in homebuying and insurance practices, as well as potential policy interventions to address affordability and access to insurance.

What's Next?

Homebuyers and industry stakeholders may need to explore alternative strategies to mitigate insurance costs, such as adjusting home search criteria or advocating for policy changes. The insurance industry might face pressure to innovate and offer more affordable solutions, while policymakers could consider regulations to ensure broader access to insurance. The ongoing dialogue around climate risks and insurance affordability is likely to intensify, influencing future real estate and insurance market dynamics.