There will be a shift in the US real estate market in the coming months, according to an industry expert.
Homeowners could see insurance premiums rise another 16% over the next two years due to an increase in natural disasters and reconstruction costs.
The average homeowners insurance premium is expected to rise 8% in 2026, followed by another 8% in 2027, real estate analytics firm Cotality predicted at an annual real estate conference.
John Rogers, Cotality’s Chief Data and Analytics Officer, explained that these premiums have “increased dramatically” in recent years, with some areas seeing double-digit growth.
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Rogers said insurance now makes up 9% of the average American homeowner payment, which is the “highest ever average of a person’s expenses in terms of principal, interest, property taxes and insurance premiums.”
The average homeowners insurance premium is expected to rise 8% in 2026, followed by another 8% in 2027. (Getty Images)
Hale also said that “more frequent disasters have resulted in more damage and increasing claims, trends that insurers are trying to anticipate.”
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Research from Realtor.com found that a “significant portion of the U.S. housing stock” actually faces severe or extreme climate risks, ranging from more than 6% from flooding, 18% from wind risks and 6% from wildfire, Hale said.
Trillions of dollars in real estate are exposed to significant risk, Hale said.
In its September report, Realtor.com noted that coastal markets dominate the list of metro areas with the highest dollar values of homes exposed to severe or extreme flood risks, although the Miami-Fort Lauderdale-West Palm Beach, Florida, market ranks first.
Approximately $306.8 billion in total home values are at risk, representing 23.2% of the area’s total home values.
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Approximately $307 billion in total home values are at stake in the Miami-Fort Lauderdale-West Palm Beach, Florida, metro area. (Jeffrey Greenberg/UCG/Universal Images Group via Getty Images)
This increase in costs could further hinder buyers in an already stagnant housing market. Many have been pushed to the sidelines by an ongoing affordability crisis, as high interest rates and rising housing costs have made it difficult for people to move.
An unexpected increase in the cost of homeowners insurance could catch existing homeowners off guard and could also discourage potential buyers trying to estimate their monthly housing costs,” says
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Hannah Jones, senior economic research analyst at Realtor.com, said in a recent report that this premium increase could discourage potential buyers trying to estimate their monthly housing costs.
“In either case, rising insurance costs could contribute to weaker buyer demand and more fragile housing stability in already fragile markets,” Jones said.
