Housing Payments Continue to Increase as Insurance Costs Skyrocket
Mortgage payments are rising, but this may have more to do with insurance costs than anything else. According to the October 2024 Mortgage Monitor Report from technology data provider Intercontinental Exchange (ICE), the average monthly mortgage payment has reached its highest level in history as of August, and while components of a mortgage payment have increased, insurance costs have seen the biggest spike.
In areas prone to natural disasters, such as New Orleans and Miami, insurance premiums are more than three times the national average. Meanwhile, regions like the Northeast and West have much lower insurance costs, with premiums falling below $3 per $1,000 of coverage in cities such as San Jose, Calif., San Francisco, and Las Vegas.
Andy Walden, ICE's VP of research and analysis, says:
“While principal, interest, and taxes have all increased in the 15-17% range since the beginning of 2020, property insurance is up 52% over the same time span. And, yes, higher home prices logically lead to higher-dollar policies; that’s why looking at the cost for every $1,000 of coverage gives us such critical, apples to apples, context. Not only are homeowners paying 12% more today for the same dollar amount of coverage than they were, on average, from 2013-2022, but they’re also insuring a smaller share of the property’s underlying value. Given that coverage amounts are based not on a property’s market value, but its replacement cost, the average policy has also gone from covering over 100% of the average home’s value back in 2013-2015 to just 88% today.”