$500 Spike in Home Insurance Costs Linked to 20% Increase in Mortgage Delinquency Rates.
Posted by TwoRight9509@reddit | collapse | View on Reddit | 46 comments
Without insurable mortgages, new loans cannot be issued, jeopardizing the housing market’s stability in key regions, like Miami for instance:
“I think it's the tip of the iceberg.” said Wayne Pathman, a Miami-based land use attorney who has spent years working on resilience issues in the region. “I think it is going to get a lot worse.”
The authors of a new study argue that while the climate crisis is - amongst other threats - inherently a housing crisis, from an insurance perspective it’s about to get worse.
The Congressional Budget Office reports that in 2023, 30% of losses from natural disasters went uninsured.
On a global scale, reinsurers raised property insurance rates by an average of 37% in 2023, reflecting the growing risk of climate-related disasters.
Condo residents report up to a tripling of monthly insurance fees, and homeowners - when they can find insurance - often find themselves paying rates they cannot sustain.
Overall the effect is yet another factor in making more housing across the nations unaffordable for many.
AdmiralBananaPool563@reddit
Just got my homeowners insurance renewal yesterday.
Have had my house for 9 years. Great credit. No claims. Low cost of living area. No bodies of water or terrible weather hazards to speak of.
Up 170% over 9 years. 22% from last year to this year.
LordTuranian@reddit
It's global warming, man. They have to make customers like you subsidize all the people who live in places that are not as safe.
NotAnotherRedditAcc2@reddit
Distributing the cost of a good/service across the entire group of people regardless of what the individual consumes is a WHACKY way to describe capitalism.
LordTuranian@reddit
But it is capitalism. Because it's done to maintain or increase profits. When something is done to maintain or increase profits, that's capitalism.
brockmasters@reddit
The other phrase is "healthy competition"
The disagreement over the word capitalism is correct from both commenter's. One viewa capitalism in it's ideal form and the other views as it the monopoly joke we engage in reality with.
By all means, argue over terms while we have to pay more regardless of who the winner is. I hope the winner of the argument pays my premiums for me :D
LordTuranian@reddit
Disagreeing with me due to some made up definition of capitalism that is some kind of utopia that doesn't exist, makes no sense.
clarence_seaborn@reddit
they will cope til they choke
LivefromPhoenix@reddit
I mean, it'd be just as much of a scam if it was done by the government instead of private insurance companies (and it is, look at national flood insurance). We all end up subsidizing Floridians building feet away from historical flood zones one way or another.
neoclassical_bastard@reddit
Yeah but they did. You can say "oh well you should have thought of that x years ago when you bought that house tough shit" and maybe so, but there's now a ton of people with their assets tied up in a house that they can't realistically sell or insure (if not now then soon). Where do you go from there? We're all going to bear the cost of this one way or another anyway.
BitcoinsForTesla@reddit
It’s not capitalism, it’s insurance mechanics. The risk goes up, the claim costs go up, the premiums go up. It’s pretty simple math actually.
You could look for insurance companies that don’t include FL customers in their pool. You’d think the regional insurance companies outside the high risk areas would be able to offer better premiums to customers not in those areas.
FUDintheNUD@reddit
This is the answer. Sure there's some crony capitalism going on but the main reason insurance premiums are going up is that people have too much shit that nobody wants to replace for them at a low cost if something happened to said shit. And the likelyhood of bad stuff happening to destroy their shit increading.
LordTuranian@reddit
In other words, capitalism.
pheonix080@reddit
They are also subsidizing EV drivers. Those cars are incredibly expensive to repair.
CollapseBy2022@reddit
They should honestly just require you install an app on your phone that measures how well you drive, maybe by just motion data alone (so it can't measure speed through GPS).
ohyeahwell@reddit
I got my notice of non-renewal. Have owned for 15 years, great credit, no claims, HCOL, not in a fire zone. I've reached out to every insurer, and two brokers trying to find a non-FAIR option.
Wave_of_Anal_Fury@reddit
If you're in Iowa, as your posting history indicates, the state as a whole is experiencing increased weather events, just as most of the country is.
https://www.iowapublicradio.org/harvest-public-media/2024-07-03/extreme-heat-floods-midwest-climate-change
https://www.radioiowa.com/2024/07/17/sw-iowa-mayor-says-long-string-of-severe-weather-is-proof-of-climate-change/
AdmiralBananaPool563@reddit
Nope. Moving to Iowa eventually. My vacation and down time is all spent there though.
But yeah, I do fall under the "most everybody's weather is wonky nowadays" umbrella. Pun intended. 😆
Texuk1@reddit
Nothing to see here pals, this is going to be the greatest economy in the history of humanity.
Rancid_Bear_Meat@reddit
I can already feel the eggs getting cheaper!!
RiverJumper84@reddit
H5N1 has entered the chat.
Rancid_Bear_Meat@reddit
Not worried. We'll just have the chickens drink bleach. We learned during the 'Wuhan Flu' -duh.
Just remember, don't look up!
ZenApe@reddit
One last spin before the wheels come off.
NotAnotherRedditAcc2@reddit
Of course I know that the bigger issue here is the destruction of the planet part, but I can't get over the idea that a full 20% of homeowners might have to miss a mortgage payment (or worse) over a $500 annual insurance rate increase.
Anyway, people paying off their mortgages early because they can't afford to the required insurance makes exact perfect this-just-figures sense to me: the ONE financial decision I got right in my life (and it was totally accidental) was buying my house when I did. It would be just great if I found myself having to pay off my 2.75% interest mortgage early.
bonesnaps@reddit
If an extra $41.66 a month causes your finances to self-implode, you probably shouldn't have considered a mortgage to begin with lol.
Cultural-Answer-321@reddit
Ever heard of inflation? Stagnate wages? What was once affordable and within budget, no longer is.
No budget planning on earth is going to save you if your income does not keep with inflation, let alone when inflation FAR surpasses raises. Throw in a couple of layoffs, illness, a recession or three, property tax inflation, and well, yer screwed.
But I'm sure this never happen to you, main character.
TwoRight9509@reddit (OP)
In many places renting is more expensive : (
ZenBourbon@reddit
Of course - rental owners are probably equally leveraged to the tits, passing on the cost to renters :(
ohyeahwell@reddit
When we first bought our house in 2009, I had to scrape and severely budget, increasing our insurance deductible from $500 to $1000 saved me $20/mth which I desperately needed.
accushot865@reddit
Mortgage payments themselves are becoming unsustainable. I talked to my bank about a mortgage and, on a single income, they were comfortable offering me a mortgage with payments that were half my monthly income. Add on to that car payments/insurance, gas, groceries, utilities, entertainment subscriptions, and other miscellaneous expenses, I could see how a $42 monthly increase would be a breaking point for some.
Livid_Village4044@reddit
Mortgages taking 50% of people's pay is what led to the 2007-2009 Great Financial Crisis.
Lenders (often non-bank) weren't supposed to be doing this anymore.
80taylor@reddit
I was always taught housing should be 30% of your income. Just because you can get a mortgage at 50, doesn't mean you should. This kind of lending and spending drove up housing costs in the first place. If you can't afford a $500 increase in your annual spending, I'd say you can't afford your house even before the cost is incurred
ExpensiveBurn@reddit
I think you're reading this wrong. A 20% increase in delinquency would be something like 5% to 6%.
The article really doesn't give specifics, and says the study is still awaiting peer review.
TeutonJon78@reddit
I don't know the current stats, but a few years ago it was released that >50% of US citizens didn't have over $500 in emergency funds and were basically one financial issue away from severe financial issues.
laeiryn@reddit
Is this Florida-only? deSantis is maliciously incompetent and I know it's sooooo much worse there.
Tangurena@reddit
Not just FL-only. Some midwest states have problems with insurance companies just plain dropping coverage. OK is one.
laeiryn@reddit
Yeah apparently the wind damage is clocking in the billions per year, and that's excluding actual tornadoes... the plains are not ready for this any more than the coasts are.
markodochartaigh1@reddit
15-20% of Florida homeowners do not have homeowners insurance. One reason that it could be higher in Florida is because so many older people here own their house outright. If you have a mortgage you have to have insurance.
https://www.newsweek.com/florida-insurance-warning-1-5-residents-uninsured-1925073
Rygar_Music@reddit
LOL none of this is sustainable.
Mad Max here we come. Buckle up.
jawfish2@reddit
Map shows patterns that odd to me, especially in the West.
Thoughts?
Livid_Village4044@reddit
It also shows low rates in western NC, and we all know what happened there. But up to 97% of homeowners didn't have flood insurance.
I was acutely aware of flooding when I was looking for homestead land in southwestern Virginia. I can get flood insurance on my home for only $12 per year, because it can't happen on my particular land.
Livid_Village4044@reddit
It also shows low rates in western NC, and we all know what happened there. But up to 97% of homeowners didn't have flood insurance.
I was acutely aware of flooding when I was looking for homestead land in southwestern Virginia. I can get flood insurance on my home for only $12 per year, because it can't happen on my particular land.
PrairieFire_withwind@reddit
We did not want to pay a climate tax. we argued and fought against such things.
We are now paying a climate tax. It cannot be called anything but a climate tax at this point.
saul2015@reddit
a tax passed on to the workers instead of the corporations and oligarchs
markodochartaigh1@reddit
Helmsley said: “We don’t pay taxes. Only the little people pay taxes.”
https://www.taxgirl.com/2007/08/20/maybe-only-the-little-people-pay-taxes-but-everybody-dies/
PracticableThinking@reddit
Some people may be in denial about climate change, but insurance companies knew better.
thepersonimgoingtobe@reddit
Midwest agent here - seeing 12-20% increases for all renewals, more outright cancelations for single weather claims among existing business. Being told this is just the first round of increases as many state departments of insurance have caps for increases in one year so this will be a multiple year thing. Along with increasing property taxes as local governments have to pick up the lack of social services in red states and now from the federal government the insurance rates make even owning a home without a mortgage expensive. These costs will be passed on to renters as well. Good times.