As climate risk increases across the U.S., homeowners insurance costs have also risen. In fact, a recent report from LendingTree shows that insurance costs now account for 8.5% of total monthly housing costs nationwide.
However, insurance costs can be cut down depending on specific variables such as the local market or the type of home. For instance, new homes are 10% to 15% cheaper to insure on average, according to a recent analysis from John Burns Research Consulting. Homes built in 2020 or later cost less per square foot to insure than homes that were built between 1980 and 2010.
Insurance is generally cheaper for new homes in markets with much older housing stock
In markets where the housing stock is much older, insurance tends to be cheaper than new homes. For instance, markets including San Francisco, Boston, and Philadelphia, offer a 20% to 50% discount on insurance.
This trend is also true for markets that have newer housing stock. For instance, new homes in Dallas, Houston, and Atlanta are 9% to 16% cheaper to insure than a comparable existing home.
What does this mean for home builders?
Builders can use this information to help sell their homes. Especially in states like California or Florida, where home insurance is top of mind for buyers, JBREC suggests builders put this information front and center in their marketing materials.
