Rising Home Insurance Costs Push More Sellers Into the Market—but Where Should They Go?

It’s no longer just mortgage rates or property taxes pushing homeowners to the brink; skyrocketing insurance premiums have become a deal breaker of their own.

In states where hurricane, wildfire, and flood threats have grown more severe—including Florida, California, and Louisiana—annual home insurance costs have surged. But even in less headline-grabbing markets like Illinois and Colorado, destructive hailstorms and rising costs of rebuilding are also driving premiums higher.

And now, the math is no longer making sense for some homeowners.

“In coastal and wildfire-prone states, I’ve worked with customers who adored their homes but couldn’t come to grips with annual premiums that were growing by thousands of dollars,” says Evan Harlow, a Maui-based real estate agent. “It’s not unusual these days for sellers to factor ‘insurance math’ right alongside property taxes and mortgage rates when deciding where and when to move.”

But while the calculus of the past has been simple algebra, homeowners today are working an equation with a missing variable: Where can they go to avoid the next premium spike?

Mapping the most expensive metros for insurance

No housing market has felt the sting of rising insurance costs quite like Miami. The estimated average premium for a single-family home in the metro now tops $22,700 a year—a staggering 3.7% of the median $614,000 home value, according to the Realtor.com® Housing and Climate Risk Report.

That burden is nearly six times higher than in San Jose, CA, where homes cost nearly three times more at $1.8 million but carry average premiums of just $3,712 annually.

In fact, five major metros have crossed a troubling threshold: insurance premiums that exceed 2% of a home’s value—a level experts advise is unsustainable. Those cities include Miami, New Orleans, Cape Coral, FL, Baton Rouge, LA, and even inland Oklahoma City.

The Realtor.com report also found that flood exposure is vastly underestimated, especially in areas outside FEMA’s official flood zones. Nearly 6 million homes, valued at $3.4 trillion, face a severe or extreme risk of flood damage over the next 30 years—many of them in places where homeowners may not even realize they’re vulnerable.

Together, the known costs and the hidden risks paint a clear picture: The insurance crisis is expanding, making it harder for homeowners to find refuge from the coming premium storm.

Why insurance costs are driving sales

The rising costs of homeownership have been a persistent thorn in the side of many homeowners, who have otherwise enjoyed a boom in their home’s equity. But even as rising home values have pushed the net worth of these individuals higher, the additional overhead of rising property taxes, utilities, and home insurance premiums has taken a considerable bite.

“With insurance rates ever increasing, we have seen the increase in the number of homeowners who are in a situation where it would be more economical to sell the house rather than to remain,” explains Doug Van Soest, founder of SoCal Home Buyers.

The squeeze has already pushed some owners to drop coverage altogether, with as many as 1 in 7 U.S. homes now going without insurance. But for those carrying a mortgage, the decision to forgo insurance isn’t an option. Lenders require coverage, and without it, a loan can’t be secured.

That’s part of why the issue is beginning to attract the attention of policymakers. Federal Reserve Chairman Jerome Powell has warned of the rise of “mortgage deserts,” regions where the combination of retreating insurers and cautious banks could make it virtually impossible to buy or sell a home with financing.

The potential scale is staggering. Research from First Street estimates that climate-related risks could erase $1.4 trillion in U.S. real estate value in the years ahead, as once-desirable properties become financially untenable.

Where sellers are moving—and what they may overlook

For homeowners pushed to the breaking point by rising insurance premiums, a few escape routes are beginning to take shape. One surprising option? Condos.

Harlow says some of his clients who couldn’t handle rising insurance premiums downsized into condominiums with HOA master policies that bundle coverage at a lower rate. It’s one more way sellers are adjusting their expectations—not just on size or location, but on how their insurance is structured.

Others are looking inland, toward the Midwest and interior South, where climate risks are perceived to be lower and coverage tends to be more affordable. But even these destinations aren’t immune. State Farm is set to raise home insurance rates by almost 30% in Illinois, adding almost $750 to the average policyholder’s annual premium.

Even destinations without climate risk can come with a different set of financial considerations.

“Moving is not risk-free,” warns Van Soest. “To counter any savings realized on insurance premiums, higher property tax, more cost of living, and even reduced choice of homes can counter it.”

The trade-offs don’t end there. Energy bills in colder climates can chip away at monthly savings. Some states levy special assessments or have fast-rising property tax valuations that can catch transplants off guard.

That’s why Harlow urges his clients to take a broad view of what affordability really means.

“I’m always counseling sellers to be holistic in their view of value: Don’t just ask, ‘What’s my premium?’ but ‘What’s my actual monthly cost of living in this new place?’”

Risk is everywhere, just different

More than a quarter of all homes in the United States face at least one severe or extreme climate risk, whether that’s from fire, flood, or hurricane-force winds, according to the Realtor.com climate study. Yet many homeowners or buyers may have no idea they’re at risk at all.

The mismatch begins with flood zones. FEMA designates certain areas as Special Flood Hazard Areas (SFHAs), but its maps often exclude risks tied to heavy rainfall or future climate scenarios. As a result, millions of properties sit outside official flood zones while still facing possible exposure.

In New York alone, an estimated $95.3 billion worth of real estate is at risk of flooding not captured by FEMA’s boundaries. In Los Angeles, that gap totals $65.6 billion; in San Francisco, it's $54.9 billion. Without awareness of the threat, homeowners may skip flood coverage altogether, leaving them financially vulnerable.

And flood risk is just one piece of the puzzle. Roughly 18.3% of U.S. homes face a high likelihood of hurricane wind damage, with nearly all properties in places like Florida and Texas exposed. Meanwhile, wildfires continue to threaten entire regions: 5.6% of homes nationwide are at severe risk, and in California alone, nearly 40% of high-risk property value is concentrated.

The patchwork of climate risk is forcing homeowners and buyers to recalibrate what “safe” really means. A lower insurance premium doesn’t always mean lower exposure; it might just mean the market hasn’t caught up to the risk yet.