Since many on this site may be buying or selling a home at any given time, own investment properties, or commercial real estate I'm posting this weekly update to stay current.
The data is well researched from my employer New American Funding's Research/Analytics Department.
Thus, it is fact based and only analyzing the data/trends without regard to government policy.
As I stated previously let's keep the thread informational for those that might be in the market and leave policy discussions in "The Corral".
I'll be posting the highlights here - for you data and chart geeks at the end is a link to the full report.
Before we get into the report and data I wanted to share 3 money saving tips for homeowners - with insurance rates going up by nearly 25% year over year #1 is a no-brainer & you still have time to protest your property taxes as discussed in #3
1. Speak with your agent on how you can reduce your policy cost
A. Ask them to shop it around with different carriers - each carrier may have a different premium based on losses in your area
B. Change your deductible from 1% to 2% if you have the cash to do so. For example if your home is insured for $200,000 and you have 1% deductible you will pay the first $2000 out of pocket on any claim as 1% of $200,000 = $2000 & If you lower it to 2% it will reduce your annual policy premium though you will now be responsible for the first $4000 of any claim as 2% of $200,000 = $4000
C. Combine Home & Auto for better discounts - also ask for list of items that could reduce your policy like distance to nearest fire station or that you have a monitored alarm- system
2. Make sure your Homestead Exemption is in place with your local taxing authorities & don't forget some MUD Districts and School Districts are separate from the county and you may need to file with them too. The Recent State Law change also lets you file your Homestead and receive the immediate benefit starting on the day you close on your home. If you are OVER 65 file that exemption as well. You'd be surprised how many people forget to file these - if you did forget some counties will allow 1 year to claim it retroactively.
3. Either protest your assessed value with your Appraisal District every year or hire a company that specializes in it. These companies usually charge you 30-50% of any saving for the first year - they are great if you don't have the time or knowledge to do it yourself. It's your right to protest - if the service does not get any reduction typically as with the people I use there is no fee - only fee is based if they get a reduction.
Ok now for this week's report!
The Highlights -
Quick Hit
As of today, traders have pushed the first expected rate cut all the way out to September as inflation readings came in hotter than expectations. Diving deeper into the data, the latest CPI report continues to show troublesome signs for home insurance rates. The March report revealed a 4.55% annual increase and the twelfth monthly increase over the past thirteen months. Believe it or not these readings are tame in comparison to what is happening in the homeowner’s insurance space since the BLS smooths things out and lags real time data. Read on to discover what potential homebuyers’ and current homeowners are forced to come to terms with in today’s housing market.
Key Points and Stats
Inflation Refuses To Cooperate Dashing The Hopes Of An Impending Rate Cut
As of today, traders have pushed the first expected rate cut all the way out to September. The Bureau of Labor Statistics reported that the headline consumer price index (CPI) rose 3.5% in March from the year prior and accelerated 0.4% from February. Economists were anticipating a gain of 3.4% and 0.3%. Excluding the volatile energy and food components, the core CPI also came in hotter than expectations with a 3.8% rise from one year ago and 0.4% gain monthly. Economists were anticipating a gain of 3.7% and 0.3%.
As we’ve been stating for a while, the lagging shelter component was a major culprit keeping inflation readings high as it rose 0.4% on the month and was up 5.7% from last year. At the same time, we were hit with bad news for workers, as they saw real average hourly earnings flat on the month and gained just 0.6% over the past year. These developments support the cautious stance that Fed officials have been warning about, keeping markets on edge about the near-term direction for monetary policy, as this marked the third consecutive strong reading shifting us away from the disinflationary narrative that many had been hoping for. The reaction in the bond market was a 19.4 basis point rise in the 10-year on the day marking the largest one-day jump in the 10-year rate since September 22, 2022.
Diving deeper into the data, the latest CPI report continues to show troublesome signs for homeowners insurance rates. The March report revealed a 4.55% annual increase and the twelfth monthly increase over the past thirteen months. Believe it or not these readings are tame in comparison to what is happening in the homeowner’s insurance space (which we will discuss later in this update) since the BLS smooths things out and lags real time data. In reality, homeowners have been seeing big jumps in prices at annual or semi-annual renewals. In addition, if you live in a flood zone, hurricane zone, or fire zone, your costs are more likely to be up 100 percent than 4 percent, if you can get insurance at all.
Homeowners Insurance Rates Skyrocket
For a more real time look at homeowners’ insurance rate increases we can look to the latest analysis from S&P Global Market Intelligence. In their latest update they reported that top companies have increased rates by 11.3% on average in 2023, with Farmers Insurance and Liberty Mutual leading the pack with increases of 19.4% and 17.2%.
The steep premium hikes can be attributed to industry participants attempting to right size their increasing losses from bigger claims caused by inflation, rising reinsurance costs and catastrophic events such as hurricanes and wildfires, as the industry is on pace its fourth straight year of underwriting losses. The rise in insurance rates is a story that seldomly gets enough attention in the housing market as it takes a back seat home prices and interest rates eating into household incomes. However, these increasing costs merit attention as insurance impacts not just potential buyers, but current homeowners purchasing power as well (even more so if you live on fixed income).
These steep increases vary from state to state, but there are a few common themes that we can draw a direct correlation from such as a rise in the cost of supplies and labor to repair or rebuild a home, and reinsurance costs that carriers purchase from one another to reduce their risk from a major claim event.
Homeowners in Texas saw the largest overall jump in effective insurance rates last year at a weighted average of 23.3%, followed by Arizona at 21.8%, and Utah at 20.3%. Meanwhile, a few states have enjoyed almost no or very modest increases. Hawaii homeowners saw only a 1.8% increase in premiums this year, followed by Vermont at 3.3%, and then Delaware and Mississippi, both at 3.9%.
In all, 25 states saw double-digit increases in their rates last year. The 2023 rise among most states is notable given that insurance rates had been rising annually in a range of 2.5% to 6.2% nationally from 2018 to 2022 before the spike in 2023 causing significant shock to an otherwise mundane line item on household balance sheets.
More location specific causes for the rise in insurance costs can be concluded from the recent rise in multi-billion-dollar disasters
Florida, for example, has been experiencing soaring litigation costs related to insurance claims in addition to the fallout from hurricanes. Texas has experienced a sharp increase in the number and severity of major storms carrying golf-ball size chunks of hail. Louisiana has suffered the familiar aftereffects of hurricanes and flooding. In all three states, private insurance carriers have taken steps to limit their business or entirely pull out of high-risk areas. Meanwhile, severe wildfires have been a major cause of rising insurance premiums in several western states causing major home insurance companies to pull back in states such as California.
What You Can Expect To Pay
Where you live has a drastic impact on what you can expect to pay for homeowners’ insurance. Homeowners in states with many natural disasters, such as hurricanes, hailstorms, and tornadoes, tend to have the highest home insurance rates. Oklahoma, Nebraska, Kansas, Florida, Arkansas, and Colorado are the most expensive states for home insurance, while Hawaii, New Hampshire, Vermont, Washington D.C., and Delaware have some of the lowest home insurance rates.
Regardless of where you live, rising home insurance costs are causing major problems for lenders across the country and it makes financial sense to do your homework and reevaluate your homeowner’s insurance options given the major developments that continue to unfold.
Hook 'Em & Have An Amazing Week!
MH
Full Report Hyperlink -
Click Here for Full Report With Charts and Diagrams
The data is well researched from my employer New American Funding's Research/Analytics Department.
Thus, it is fact based and only analyzing the data/trends without regard to government policy.
As I stated previously let's keep the thread informational for those that might be in the market and leave policy discussions in "The Corral".
I'll be posting the highlights here - for you data and chart geeks at the end is a link to the full report.
Before we get into the report and data I wanted to share 3 money saving tips for homeowners - with insurance rates going up by nearly 25% year over year #1 is a no-brainer & you still have time to protest your property taxes as discussed in #3
1. Speak with your agent on how you can reduce your policy cost
A. Ask them to shop it around with different carriers - each carrier may have a different premium based on losses in your area
B. Change your deductible from 1% to 2% if you have the cash to do so. For example if your home is insured for $200,000 and you have 1% deductible you will pay the first $2000 out of pocket on any claim as 1% of $200,000 = $2000 & If you lower it to 2% it will reduce your annual policy premium though you will now be responsible for the first $4000 of any claim as 2% of $200,000 = $4000
C. Combine Home & Auto for better discounts - also ask for list of items that could reduce your policy like distance to nearest fire station or that you have a monitored alarm- system
2. Make sure your Homestead Exemption is in place with your local taxing authorities & don't forget some MUD Districts and School Districts are separate from the county and you may need to file with them too. The Recent State Law change also lets you file your Homestead and receive the immediate benefit starting on the day you close on your home. If you are OVER 65 file that exemption as well. You'd be surprised how many people forget to file these - if you did forget some counties will allow 1 year to claim it retroactively.
3. Either protest your assessed value with your Appraisal District every year or hire a company that specializes in it. These companies usually charge you 30-50% of any saving for the first year - they are great if you don't have the time or knowledge to do it yourself. It's your right to protest - if the service does not get any reduction typically as with the people I use there is no fee - only fee is based if they get a reduction.
Ok now for this week's report!
The Highlights -
Quick Hit
As of today, traders have pushed the first expected rate cut all the way out to September as inflation readings came in hotter than expectations. Diving deeper into the data, the latest CPI report continues to show troublesome signs for home insurance rates. The March report revealed a 4.55% annual increase and the twelfth monthly increase over the past thirteen months. Believe it or not these readings are tame in comparison to what is happening in the homeowner’s insurance space since the BLS smooths things out and lags real time data. Read on to discover what potential homebuyers’ and current homeowners are forced to come to terms with in today’s housing market.
Key Points and Stats
- The headline consumer price index (CPI) rose 3.5% in March from the year prior and accelerated 0.4% from February. Economists were anticipating a gain of 3.4% and 0.3%.
- Excluding the volatile energy and food components, the core CPI also came in hotter than expectations with a 3.8% rise from one year ago and 0.4% gain monthly. Economists were anticipating a gain of 3.7% and 0.3%.
- The lagging shelter component was a major culprit keeping inflation readings high as it rose 0.4% on the month and was up 5.7% from last year.
- Real average hourly earnings flat on the month and gained just 0.6% over the past year.
- The reaction in the bond market was a 19.4 basis point rise in the 10-year on the day marking the largest one-day jump in the 10-year rate since September 22, 2022.
- Top companies have increased home insurance rates by 11.3% on average in 2023, with Farmers Insurance and Liberty Mutual leading the pack with increases of 19.4% and 17.2%.
- Homeowners in Texas saw the largest overall jump in effective insurance rates last year at a weighted average of 23.3%, followed by Arizona at 21.8%, and Utah at 20.3%.
- A few states have enjoyed almost no or very modest increases. Hawaii homeowners saw only a 1.8% increase in premiums this year, followed by Vermont at 3.3%, and then Delaware and Mississippi, both at 3.9%.
- In all, 25 states saw double-digit increases in their rates last year.
- The 2023 rise among most states is notable given that insurance rates had been rising annually in a range of 2.5% to 6.2% nationally from 2018 to 2022 before the spike in 2023 causing significant shock to an otherwise mundane line item on household balance sheets.
Inflation Refuses To Cooperate Dashing The Hopes Of An Impending Rate Cut
As of today, traders have pushed the first expected rate cut all the way out to September. The Bureau of Labor Statistics reported that the headline consumer price index (CPI) rose 3.5% in March from the year prior and accelerated 0.4% from February. Economists were anticipating a gain of 3.4% and 0.3%. Excluding the volatile energy and food components, the core CPI also came in hotter than expectations with a 3.8% rise from one year ago and 0.4% gain monthly. Economists were anticipating a gain of 3.7% and 0.3%.
As we’ve been stating for a while, the lagging shelter component was a major culprit keeping inflation readings high as it rose 0.4% on the month and was up 5.7% from last year. At the same time, we were hit with bad news for workers, as they saw real average hourly earnings flat on the month and gained just 0.6% over the past year. These developments support the cautious stance that Fed officials have been warning about, keeping markets on edge about the near-term direction for monetary policy, as this marked the third consecutive strong reading shifting us away from the disinflationary narrative that many had been hoping for. The reaction in the bond market was a 19.4 basis point rise in the 10-year on the day marking the largest one-day jump in the 10-year rate since September 22, 2022.
Diving deeper into the data, the latest CPI report continues to show troublesome signs for homeowners insurance rates. The March report revealed a 4.55% annual increase and the twelfth monthly increase over the past thirteen months. Believe it or not these readings are tame in comparison to what is happening in the homeowner’s insurance space (which we will discuss later in this update) since the BLS smooths things out and lags real time data. In reality, homeowners have been seeing big jumps in prices at annual or semi-annual renewals. In addition, if you live in a flood zone, hurricane zone, or fire zone, your costs are more likely to be up 100 percent than 4 percent, if you can get insurance at all.
Homeowners Insurance Rates Skyrocket
For a more real time look at homeowners’ insurance rate increases we can look to the latest analysis from S&P Global Market Intelligence. In their latest update they reported that top companies have increased rates by 11.3% on average in 2023, with Farmers Insurance and Liberty Mutual leading the pack with increases of 19.4% and 17.2%.
The steep premium hikes can be attributed to industry participants attempting to right size their increasing losses from bigger claims caused by inflation, rising reinsurance costs and catastrophic events such as hurricanes and wildfires, as the industry is on pace its fourth straight year of underwriting losses. The rise in insurance rates is a story that seldomly gets enough attention in the housing market as it takes a back seat home prices and interest rates eating into household incomes. However, these increasing costs merit attention as insurance impacts not just potential buyers, but current homeowners purchasing power as well (even more so if you live on fixed income).
These steep increases vary from state to state, but there are a few common themes that we can draw a direct correlation from such as a rise in the cost of supplies and labor to repair or rebuild a home, and reinsurance costs that carriers purchase from one another to reduce their risk from a major claim event.
Homeowners in Texas saw the largest overall jump in effective insurance rates last year at a weighted average of 23.3%, followed by Arizona at 21.8%, and Utah at 20.3%. Meanwhile, a few states have enjoyed almost no or very modest increases. Hawaii homeowners saw only a 1.8% increase in premiums this year, followed by Vermont at 3.3%, and then Delaware and Mississippi, both at 3.9%.
In all, 25 states saw double-digit increases in their rates last year. The 2023 rise among most states is notable given that insurance rates had been rising annually in a range of 2.5% to 6.2% nationally from 2018 to 2022 before the spike in 2023 causing significant shock to an otherwise mundane line item on household balance sheets.
More location specific causes for the rise in insurance costs can be concluded from the recent rise in multi-billion-dollar disasters
Florida, for example, has been experiencing soaring litigation costs related to insurance claims in addition to the fallout from hurricanes. Texas has experienced a sharp increase in the number and severity of major storms carrying golf-ball size chunks of hail. Louisiana has suffered the familiar aftereffects of hurricanes and flooding. In all three states, private insurance carriers have taken steps to limit their business or entirely pull out of high-risk areas. Meanwhile, severe wildfires have been a major cause of rising insurance premiums in several western states causing major home insurance companies to pull back in states such as California.
What You Can Expect To Pay
Where you live has a drastic impact on what you can expect to pay for homeowners’ insurance. Homeowners in states with many natural disasters, such as hurricanes, hailstorms, and tornadoes, tend to have the highest home insurance rates. Oklahoma, Nebraska, Kansas, Florida, Arkansas, and Colorado are the most expensive states for home insurance, while Hawaii, New Hampshire, Vermont, Washington D.C., and Delaware have some of the lowest home insurance rates.
Regardless of where you live, rising home insurance costs are causing major problems for lenders across the country and it makes financial sense to do your homework and reevaluate your homeowner’s insurance options given the major developments that continue to unfold.
Hook 'Em & Have An Amazing Week!
MH
Full Report Hyperlink -
Click Here for Full Report With Charts and Diagrams
