The U.S. Homebuying Affordability Crisis: Why It’s Not Going Away Anytime Soon

Housing affordability in the U.S. remains critically low and is unlikely to improve soon due to rising home prices, stable or high mortgage rates, and slow income growth. Even with 4% income growth projected through 2030, the affordability gap will widen. Renters face added challenges due to lower incomes and limited savings. Home prices and mortgage rates would need to fall sharply to restore affordability, which is unlikely. Demographic pressure from first-time buyers and constrained supply will continue to elevate prices. Rising insurance and property tax costs further stress affordability, with state-level disparities driven by local economic and policy factors.

Rising Property Taxes and Insurance (2019–2035 Forecast)

This chart shows a steady increase in total housing-related costs, specifically property taxes (orange) and homeowners’ insurance (dark blue). From 2019 to 2035, total costs rise from around $4,000 to nearly $12,000 annually. A sharp +6.2% jump is projected around 2024, driven largely by insurance hikes. The continued upward trend suggests that these non-mortgage costs will significantly impact housing affordability through 2035.

States with Highest Insurance Increases (2024)

This bar chart highlights the top 10 U.S. states with the largest year-over-year increases in homeowners’ insurance in 2024. Nebraska (NE) leads with nearly a 24% increase, followed by Montana (MT), Iowa (IA), and Minnesota (MN). All listed states saw insurance costs rise 15–24% YoY, further straining household budgets and worsening housing affordability in those areas.

Bottom Line for Insurers and Insurance Investors

Surging homeowners’ insurance premiums—driven by climate risk, rising property values, and regulatory pressures—are creating both headwinds for housing affordability and tailwinds for insurer revenue growth. For insurers, the trend signals opportunity in premium expansion but also calls for strategic risk management and pricing precision, especially in high-growth or climate-vulnerable states. Investors should watch for geographic exposure, underwriting discipline, and regulatory shifts, as these will shape long-term profitability in the housing-linked insurance market.