The housing market’s home insurance shock, as told by an interactive map

09/15/2024, 8:18 AM
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Over the past few years, many housing markets have experienced a home insurance shock. Part of this is due to insurance models reassessing disaster risks, while much of it stems from rising housing and construction costs. Replacement and repair costs have soared, and insurers are trying to keep pace, though some state insurance commissions are slowing the process.

To better understand what has happened to home insurance across the country, ResiClub reached out to economists Benjamin Keys, a professor of real estate economics at the University of Pennsylvania’s Wharton School, and Philip Mulder, a professor of insurance at the University of Wisconsin-Madison. This summer, they published a paper for the National Bureau of Economic Research (NBER), conducting their analysis using raw data from CoreLogic.

They found that the three-year shift in the median annual U.S. home insurance premium from 2020 to 2023 was 33%. That’s a bit above the three-year shift in U.S. home prices from December 2020 to December 2023 (28%).The interactive map below shows the counties where home insurance premiums have increased the most over that time period.

“We find that premiums have risen sharply since 2020, that this growth has been concentrated in disaster-prone ZIP codes, and that elevated reinsurance costs are a critical driver of the increase,” wrote Keys and Mulder in their NBER paper.

Among the 500 largest U.S. counties, these 15 counties saw the biggest three-year increase in median home insurance premiums from 2020 to 2023. Nine of them are in Florida:

Prince William County, Virginia: 150.2%
St. Tammany Parish, Louisiana: 117.8%
Calcasieu Parish, Louisiana: 90.8%
Weber County, Utah: 86.4%
Flagler County, Florida: 79.7%
Martin County, Florida: 77.9%
Santa Rosa County, Florida: 76.7%
Escambia County, Florida: 74.2%
Lee County, Florida: 72.2%
Utah County, Utah: 71.6%
Marion County, Florida: 70.9%
Okaloosa County, Florida: 70.1%
Guilford County, North Carolina: 70.1%
St. Lucie County, Florida: 65.7%
Manatee County, Florida: 64.7%

According to analysts, Florida’s home insurance shock is exacerbated by greater climate risk, insurance ligation, and insurance fraud.

The mortgage rate shock has impacted the entire country evenly, but the affordability squeeze from overheated home price growth and rising home insurance costs has not.

Florida, in particular, has experienced some of the largest increases in home insurance premiums and home prices over the past three years. The pandemic housing boom was especially intense in Florida, as remote work enabled an influx of buyers from the north.

Florida's strained affordability, coupled with a slowdown in work-from-home migration, is why Florida housing market appears to have an increased near-term vulnerability and correction risk. This also helps explain why new structural safety rules in Florida that require additional condo repair funds to be set aside by the end of 2024 (the rules were passed after the 2021 Surfside condo collapse that claimed 98 lives), have coincided with a decline in condo prices in many Florida markets this year. This is also why Hurricane Ian, which struck in September 2022, has dealt an especially hard blow to housing markets in areas like Cape Coral, North Port, and Punta Gorda.