Home Insurance Rates Growing at Nearly Double the Rate of Homeowner Income
A new Zillow analysis reveals that since 2019, home insurance premiums have grown 38% nationally, while the median homeowner income has grown only 22%. Insurance premiums are growing at the fastest rate in places with relatively higher climate risk.
The five metro areas with the highest growth in insurance premiums since 2019 are:
- Miami, which has experienced a 57% growth rate in insurance premiums. Across the Miami metro area, $1.4 trillion of residential real estate is at major risk of extreme wind.
- Sacramento, which has seen a 54% growth rate in insurance premiums. Among major metro areas, Sacramento has the second-highest share of homes at major risk of wildfire (46%).
- Florida’s Jacksonville (51% growth in insurance premiums) and Orlando (49% growth), where virtually all homes face major risk of extreme winds.
- Richmond, which has seen a 48% growth in premiums. In Richmond, 95% of homes face major risk of extreme wind.
How different homeowners might experience the financial impacts of rising insurance premiums.
In the largest metro areas, insurance costs range from $1,200 to $4,000 annually for the typical homeowner and comprise about 2% of household income. The typical annual insurance premium has increased by $500 since 2019.
But there are large differences in major markets across the country. In Boston, premiums have increased by only 14% since 2019, adding an additional $267 to the annual cost of homeownership, whereas in Miami, insurance premiums rose by 57% during that time, an increase of $1,478.
The financial impacts also feel different depending on whether the homeowner is a first-time buyer, a retiree on a fixed income, or a landlord with multiple homes in an area facing high climate risk. For instance, in New Orleans, the median homeowner income is $85,786, while the median household income is a much-lower $65,099. The pinch of an insurance price spike may not be that painful for those who currently own their home, but it could make the financial hurdle of homeownership even bigger for first-time buyers.
Compounding the pain of rising insurance premiums is an already challenging affordability environment. Since 2019, the cost of a typical mortgage has more than doubled. Moreover, the cost of insurance is likely to continue its upward trajectory due to the growing number of homes vulnerable to damage by more frequent and severe weather-related natural disasters. Other research has shown that higher homeowners insurance premiums are already having an impact, increasing the probability of mortgage and credit card delinquency, and leading to declines in credit worthiness.
How rising insurance costs might affect the country’s affordable housing stock.
In addition to looking at how the rising cost of insurance could affect homeowner budgets, we explored how insurance rate increases could impact the availability of affordable listings. [1]
Currently, roughly a third of for-sale listings in the U.S. are considered affordable for a household making the median income. Here, there’s some good news: Even if insurance premiums were to increase by 10%, 20%, or even 30%, the stock of affordable homes among those currently listed for sale would decline by only around 1%—a total of about 4,000 homes.
But this is not the case in every metro area. For instance, if insurance were to rise by 30% in New Orleans, where 84% of homes face major flood risk and virtually all homes face major risk from extreme wind, the number of affordable listings would drop by more than 12%. And in Oklahoma City, where 25% of homes face major wildfire risk, a 30% increase in insurance premiums would cause the number of affordable listings to fall by almost 11%.
The bottom line: Home insurance premiums are climbing much faster than homeowner incomes, but for most, the added cost remains a small share of their budget. Nonetheless, the squeeze is sharper in high-risk areas and for lower-income buyers, and the financial strain is likely to intensify as climate risks and insurance challenges grow.
Methodology
Zillow Economic Research uses American Community Survey (ACS) data, available until 2023, and the producer price index (PPI) for homeowner’s insurance rates to nowcast monthly regional insurance rates. If the household is underinsured, the actual insurance bill is reported for the ACS, not the counterfactual insurance premium for full coverage. From the insurance rates, the monthly insurance payment is calculated by multiplying the insurance rate by the typical home value for the region, as measured by the Zillow Home Value Index (ZHVI). The typical (median) household income for each geography is also sourced from ACS data, and interpolated using growth rates for the Employment Cost Index (ECI) published by the Bureau of Labor Statistics.
The number of affordable listings is calculated as the count of active listings available in the Zillow database for the month of April 2025, such that the median household would not spend more than 30% of their monthly income on the newly purchased home, including its mortgage payment, homeowner’s insurance, property taxes, and maintenance costs.
Climate risk data is available on for-sale homes listed on Zillow. The climate risk data is powered by data from First Street, a trusted leader in climate risk modeling. According to First Street, a score of 1 is considered minimal, 2 is minor, 3–4 is moderate, 5–6 is major, 7–8 is severe, and 9–10 is extreme.
[1] For a listing to be considered affordable, the monthly housing payments for a newly purchased home, including mortgage and recurring costs like insurance, must not exceed 30% of household income. This assumes a buyer puts 20% down.