January 21, 2026
When most people think about housing affordability, they focus on mortgage rates, inventory, and price trends, but heading into 2026, insurance is quietly becoming one of the biggest hidden cost drivers in real estate. Rising premiums and fewer insurance options are beginning to influence buyer and investor behavior across residential and commercial markets, especially in regions prone to natural disasters.
Homeowners’ insurance premiums have been climbing faster than inflation‑adjusted home prices for years. For example, multifamily insurance costs increased roughly 75% from 2019 to 2024, putting additional pressure on operating expenses and rents. This rising cost matters because insurance isn’t just a bill — it affects affordability, financing, and underwriting decisions. Buyers and lenders are now looking at the ratio of insurance premiums to mortgage payments as part of the overall carrying cost of a property. When insurance costs grow faster than home prices or wages, overall affordability deteriorates.
It’s not just premiums that are affecting property markets; it’s the shrinking pool of insurers willing to offer coverage. A recent insurance trends report found that the average number of insurance quotes available to homeowners declined by about 27%, especially in catastrophe‑exposed areas like coastal or wildfire zones. Fewer quotes mean less choice and more uncertainty for buyers trying to close deals.
This has already begun impacting buyer behavior and how lenders underwrite loans in certain markets. When insurers tighten capacity, lenders often become more cautious, which can slow closings or reduce financing options for higher‑risk properties.
A big theme emerging for 2026 is the divergence between properties that have taken mitigation steps and those that haven’t. Traditional pricing has sometimes treated homes similarly even when risk profiles differ significantly. But newer, data‑driven models look more precisely at property‑level risk factors like roof condition, vegetation, debris risk, and documented upgrades. Properties with fewer expected losses are increasingly likely to secure better premiums and more insurer interest, while higher‑risk homes face less competition and higher costs.
This shift means that mitigation efforts could increasingly show up in cost and value calculations — making risk reduction an investment decision, not just a maintenance one.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
