Experts warn of overlooked financial obstacle for would-be homebuyers: 'This is a relatively new trend'

The cost of buying a home in the U.S. has gone up dramatically. However, it's not just home prices that are influencing the decreasing rate of Americans able to afford purchasing a home.

According to reports by Forbes, rising insurance rates are also making it more challenging for first-time home buyers. 

What's happening?

Rising insurance rates have become yet another factor deterring prospective buyers from purchasing a home.

"First-time home buyers have dropped to the lowest level recorded in more than four decades," the National Association of Realtors' economist Jessica Lautz told Forbes.

To put this in context, Lautz referenced a 2024 NAR homebuying study, which found that insurance costs have increased by more than 50% over the past 10 years.

In areas vulnerable to extreme weather events, such as California, Florida, and Texas, insurance rates have significantly increased as a result of more powerful and frequent storms.

Historically, insurance rates weren't a main contributing factor for prospective home buyers.

"This is a relatively new trend," licensed insurance expert and LendingTree contributor Rob Bhatt told Forbes. "Up until a few years ago, homeowners insurance was usually an afterthought in the homebuying process. Many homebuyers now need to think about home insurance earlier on in the process than before."

Why are rising homeowner's insurance rates important?

Increasing insurance rates underscore yet another consequence of rising global temperatures. The continued use of dirty energy exacerbates the overheating of our planet, which in turn, causes more powerful and frequent storms.

As a result, insurance rates are not only increasing, but insurers are also dropping coverage in areas prone to natural disasters. 

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What's being done about rising insurance rates for homeowners?

Experts recommend homeowners "shop around" for the best rate in their area. For long-term savings, it's best to save for more expensive repairs. Filing for multiple small repairs can cause your insurance rate to increase.

Moving forward, some experts are hopeful that rates will stabilize.

"We may be entering a normal pattern where rates only increase slightly from year to year or even come down," Bhatt told Forbes. This, in turn, may provide some relief to homeowners and home buyers.

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