Increasing Insurance Expenses Intensify Housing Affordability Challenges for Texans
According to a recent report from the Kinder Institute for Urban Research and Texas 2036, a statewide public policy organization, when homeowners insurance is included in the overall cost of homeownership, nearly two-thirds of households in Texas find themselves unable to afford the median-priced home in their respective counties. Researchers estimate that approximately seven million households in Texas, which equates to around 64% of the state, are unable to afford the median-priced home in their county.
“Homeowners insurance has become an increasingly important part of the housing affordability conversation because median insurance costs have increased at a higher rate than home purchase prices,” said Steve Sherman, Associate Director of Research at the Kinder Institute’s Center for Housing and Neighborhoods.
The report titled “The Insurance Squeeze: Rising Premiums, Affordability and Income Inequality Across Texas Counties Since 2000,” provides an analysis of homeowners insurance premiums across all 254 counties in Texas, alongside home values, household income, and demographic data collected over more than twenty years.
While public discourse has largely centered on the reasons behind the continuous rise in insurance premiums, this research delves into the impact of these escalating costs on housing affordability throughout Texas. Further, homeowners insurance premiums have surged at a rate significantly outpacing household incomes. From 2009 to 2024, premiums increased by 74%, whereas median household income saw a mere 11% rise. In the last five years alone, premiums have jumped by 30%, in stark contrast to the approximately 3% growth in income.
Moreover, maintaining insurance coverage for a home is now taking up a larger portion of the family budget than it did fifteen years ago. In the median Texas county, homeowners allocated around 2.9% of their household income to insurance in 2009. By 2024, this percentage had escalated to nearly 4.7%, placing an even heavier financial strain on lower-income households.
“Texas is a huge state with very different housing markets and climates that can affect insurance prices, but one thing remains consistent across the state; homeowners insurance costs have become a growing affordability challenge nearly everywhere,” Sherman said.
The report was created in collaboration with Texas 2036, which recently conducted a statewide voter poll revealing that almost 80% of Texans have experienced a rise in their homeowners insurance costs over the last five years, positioning it as one of the primary affordability issues in the state.
“Texas voters told us in our polling that their insurance costs are climbing. This analysis quantifies it,” said Tracy Ayrhart, VP of Data and Research at Texas 2036. “Premiums are now a large enough share of housing costs that a single year’s increase can price tens of thousands of households out of buying a home. What we still can’t see is how households are absorbing it. That’s the question worth taking up next.”
Researchers project that a 10% rise in homeowners insurance premiums could result in nearly 50,000 additional households in Texas exceeding the affordability threshold, rendering the median-priced home in their respective counties unattainable.
The report further indicates that the burden of these costs is not evenly distributed. Households with lower incomes encounter the most significant challenges regarding affordability, while Black and Hispanic households face considerably larger gaps in homeownership affordability compared to their white and Asian counterparts. Although the pressures of affordability are most pronounced in rapidly growing metropolitan areas like Houston, Dallas, and Austin, numerous rural counties are also experiencing disproportionately high insurance costs in relation to home values.
The researchers assert that these findings underscore a transformation in the housing landscape of the state. Traditionally, discussions about affordability have centered around home prices, mortgage rates, and property taxes. However, homeowners insurance must now be included in these discussions as well.
“Without some kind of policy change or market disruption, homeowners should hope for the best but prepare for the worst by factoring rising insurance costs into their long-term housing budgets,” Sherman said.
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