If you’ve been looking for a home in recent years, you’ve probably kept an eye on interest rates – and for good reason. A few points one way or the other on your mortgage rate can translate into a difference in tens of thousands of dollars of purchasing power.

But going forward, it might be important for homeowners and potential buyers to focus on another factor, at least according to Marc Cuban.

“Home insurance in areas hit by repeated disasters is going to be the number one housing affordability issue over the next 4 years. And perhaps halfway through. Even more so than interest rates ” said the billionaire entrepreneur and investor. recently published on Bluesky. “Florida, in particular, is going to have huge problems.”

While insurance experts may dispute that certainty, they say it’s hard to argue with the general sentiment. “I think it’s safe to say that’s an accurate statement,” says Shannon Martin, an insurance analyst at Bankrate.

Home insurance costs on the rise

Although you can legally own a home without a homeowner’s insurance policy, financial institutions – like your mortgage lender – generally require that you have coverage. You are generally insured for damage to your home, related structures, personal property, and liability in case someone is injured or their property is damaged in your home.

On average, you’ll pay $2,304 per year for a policy with $300,000 of dwelling coverage, according to Bankratean increase of 17% compared to January 2022. Certain individual factors tend to increase costs. You’ll pay more if you own a trampoline or swimming pool, for example, which increases the risk of injury in your home.

You’ll pay more if there’s a greater chance you’ll file a claim to repair a weather-damaged home. According to Bankrate, hurricane-prone Florida residents pay an average of $5,527 a year for $300,000 in home coverage, second only to Nebraska Wind.

Experts say the situation will only become more costly for those living in disaster-prone areas. On the one hand, insurance companies have a better understanding of extreme weather risks, Martin says.

“More and more insurance companies are using technology and AI to move into prediction and prevention mode instead of reactive mode,” she says. “They’re starting to be able to identify homes that are actually higher risk and refine them.”

While this may be good news for people who live in low-risk areas of high-risk states, homeowners in disaster-prone areas “could see rates increase significantly,” Martin says.

If proposed policies, such as a tariff regime on foreign materials, were to be adopted under the next presidential administration, construction costs would likely increase as well, experts say. This is bad news for policyholders, who bear the cost of rebuilding a damaged house.

“Homes cost more to build, which makes them more expensive to buy and more expensive to insure,” says Leslie Kasperowicz, editor and insurance expert for Insurance.com. “Add in a high-risk location and you have a recipe for a crisis.”

What to do to combat rising home insurance costs

It’s not hard to imagine how rising housing premiums could deprive families of homes they could otherwise afford – especially if the spread of climate disasters continues to put more and more homes at risk. After all, the difference between the typical annual cost in Florida and the national average is more than $2,000 per year.

Here’s what experts say you can do to cut costs.

If you already own a home

Only about 7% of homeowners report moving to areas with less risk of extreme weather in the past five years. according to Bankrate. If you’re staying put, taking steps to protect your home from weather damage can reduce your insurance costs.

“Making changes and improvements to your home to reduce the risk of damage can really lower rates,” says Kasperowicz. “In Florida, insurance companies are required to give a discount for wind mitigation efforts; the same applies to wildfire mitigation in California. But no matter where you live, a new roof will always make a huge difference in your rates.”

If you intend to live in a high-risk area, you would be wise to place these projects at the top of your home spending priority list.

“My best advice for the average homeowner who is feeling a little tired and financially strapped is to understand that extreme weather occurs all year round and this is an ongoing plan,” says Martin .

That means if you’re planning to paint or add new carpet this year, you might be better off upgrading your storm shutters or removing a damaged tree from your property.

If you’re shopping for homes

If you have any flexibility in terms of locationConsider homeowners insurance costs early in your search, experts say.

“Start by looking at the average rates in the fields you’re considering. While this won’t tell you what you’ll pay, it will give you an idea of ​​how different fields compare on a high level,” says Kasperowicz. “Choosing to live a little further from the source of risk can make a huge difference. This is especially true when you consider the distance from the coast.”

Martin recommends using online tools, such as the one available on the Première Rue Foundation – to determine whether a particular location may pose a significant future risk from climate change. Ideally, she says, you want to be able to buy a home knowing that you can be financially and physically secure wherever you choose to put down roots.

Once you’ve chosen an area, start asking your local real estate agent about insurance costs to give you a complete idea of ​​what you’ll pay on a monthly basis.

“You can and should get quotes before you get too far into the buying process,” says Kasperowicz. “You don’t want to be about to close your contract and find out the insurance is unaffordable.”

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