This week, LendingOne analysts parsed through state-level homeowners insurance data to determine what single-family investors are seeing across the country.
LendingOne’s top-line findings:
- U.S. homeowners insurance effective rates increased 11.3% in 2023—up from a 6.2% increase in 2022. That’s eating into some investors’ rental cash flow.
- Last year, homeowners insurance rates increased the most in Southwestern markets.
- The cost of homeowners insurance has increased the most in Texas since 2018, with a cumulative increase of 60% over the past five years.
The five states with the biggest homeowners insurance effective rate increases in 2023, according to LendingOne’s analysis of data from S&P Global Market Intelligence:
- Texas: +23.3%
- Arizona: +21.8%
- Utah: +20.3%
- Illinois: +18.5%
- Oregon: +16.5%
It isn’t just a result of climate-related risks.
The U.S. has seen particularly high home insurance effective rate jumps in the past couple of years, echoing the spikes in home prices during the Pandemic Housing Boom. Simply put, rising repair and renovation costs have put upward pressure on insurance premiums.
Between 2018 and 2021, only one state (Florida in 2020) experienced a one-year effective rate increase of more than 10.0%. In 2022, six states saw double-digit effective rate increases. In 2023, 25 states saw homeowners insurance rate increases of 10.0% or higher.
Big Picture: Single-family landlords are seeing their homeowners insurance premiums rise quickly—and not just in coastal states more prone to natural disasters.