Austin Business Journal writes, "Real estate agents are struggling to close on deals because of the surging cost of homeowners insurance.
That’s according to real estate firm Redfin Corp.'s 2025 Industry Survey, which found 47% of surveyed agents said they have encountered more issues with home insurance during a transaction over the past year compared to the year before it.
Overall, 21% of agents said they had "significantly more" issues recently with homeowners insurance, such as clients having trouble getting affordable insurance or canceling a purchase because of homeowners insurance. About 26% said they had "somewhat more" issues while 35.7% said it was about the same as the year before.
In California, about 50% said they had significantly more issues with homeowners insurance, and 25% said they had somewhat more issues. Florida also saw an uptick in insurance-related problems, with 41.5% of agents saying they had significantly more issues with homeowners insurance, and 31.4% said they had "somewhat more" issues.
According to the survey, 16% of agents said many, most or all their customers over the past year had homeowners-insurance problems while 18.4% said "some" of their customers experienced insurance problems. In California, about 37.8% of agents said many, most or all their customers had problems, while another 31.1% said "some" did.
Cost of homeowners insurance on the rise across the U.S.
The home insurance roadblock is unlikely to abate anytime soon, even as some states take drastic action to address the crisis.
California instituted a one-year moratorium this year on insurance companies canceling or not renewing policies for those affected by the Los Angeles wildfires, after insurers dropped homeowners in the months leading up to the disaster.
Florida also saw insurers pulling out of that market last year after a spate of hurricanes, and a recent study found up to 20% of Florida homeowners may not have insurance. There are warning signs in other states, too, with concerns about insurance nonrenewals and costs growing in Maine, Colorado and Arizona.
A 2024 working paper from the University of Pennsylvania and the University of Wisconsin School of Business found premiums had already increased about 33% on average from 2020 to 2023 — or 13% after accounting for inflation. The more likely a home is considered to have a higher disaster risk, the more those homeowners pay — about $500 more per year in 2023 than those who don't live in a place considered a high-risk disaster area.
By 2053, homeowners exposed to climate-related risks will face a $700 rise in annual insurance premiums, according to the working paper, although the researchers say that is a conservative estimate.
Digital-insurance marketplace Matic found average premiums for new customers increased by 17.4% from 2023 to the first half of 2024, the latest hike in a trend of premium increases over the past five years.
At policy renewal, homeowners saw an average increase of about 25% between 2023 and the first half of 2024, after a 17% increase the year before. Meanwhile, about 63% of lenders reported at least one borrower they worked with recently had problems securing home insurance.
All of these issues have compounded into big problems for many homeowners across the country. A survey by ValuePenguin, an insurance company owned by LendingTree, found two-thirds of homeowners saw their homeowners insurance premiums increase in 2024. And 25% of homeowners said they were dropped by the insurer, up from 19% the year before.
The survey of homeowners also found:
- 50% say they are worried their homes will become uninsurable in the future.
- 44% say home insurance is more difficult to afford now than in prior years.
- 75% say they are anticipating more rate hikes in 2025.
- 34% say they’ve reduced their home-insurance coverage to save money.
- 31% say they've considered dropping home insurance completely.
"Insurance companies have responded to large-scale natural disasters and inflation by raising rates in many parts of the country,” said Rob Batt, LendingTree insurance analyst, in a statement with the survey. "Some have stopped accepting new customers in risky areas and are even dropping existing customers. This is making home insurance harder to get and more expensive."
But homeowners are also making home-purchase decisions based on climate-change considerations such as extreme weather and flooding risk, according to the Redfin survey.
Affordability is also a big issue when it comes to insuring homes and choosing when and where to purchase. Median home prices skyrocketed during the pandemic, from $327,100 in the fourth quarter of 2019 to $442,600 in the fourth quarter of 2022 — a 35% increase, according to data from the Federal Reserve Bank of St. Louis.
Since then, sale prices have largely leveled off, with the median price standing at $419,200 in the fourth quarter of 2024."
Source: Austin Business Journal
Written by: Andy Medici
Published: April 28, 2025
Posted by Grossman & Jones Group on
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