Homeowners Feel the Squeeze

Homeowners throughout the country are feeling the squeeze due to rising property taxes and insurance costs, new polling indicates.

Polling conducted by Redfield & Wilton Strategies exclusively for Newsweek found that most homeowners have seen either their property taxes or insurance costs rise within the past year. Surveying 1,500 eligible voters across the U.S. on May 1, the poll found that 65 percent of Americans had seen a hike in their property taxes, while 69 percent were now paying more for their home insurance policies.

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Five percent of those polled said their property taxes had decreased in the past year, with the same percentage reporting a dip in home insurance prices.

Those living in the Midwest were more likely to have witnessed cost increases related to their homes, with 74 percent saying they were paying more in property taxes than they had previously, and 73 percent saying their insurance premiums had been raised.

The issue of rising property taxes has been on Americans' minds recently, with a January UChicago Harris/AP-NORC poll finding that about two-thirds of Americans surveyed believed their property tax rate was too high.

Property Taxes

Property tax rates are applied locally, and according to the retail lender Rocket Mortgage, the highest rates are paid in New Jersey, Illinois and New Hampshire. The lowest property tax rates are applied in Hawaii, Alabama and Colorado.

Polling results showing increasing property taxes indicate a trend of rising house prices throughout the country, experts told Newsweek.

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"The assessed values of homes have skyrocketed in the past few years, so municipalities are able to collect higher amounts of tax on properties and homes," said Brian Mollo, the owner and CEO at Trusted House Buyers. "As someone that owns a few investment homes, it is not that tax rates have been increased, but rather the taxable value of the house itself has increased. It is like getting a promotion or raise at work. Your income increases, so the amount of taxable income you have also increases."

Greg Batista, the president of south Florida's G. Batista Engineering & Construction, said, "Many regions have seen significant increases in home values, especially in states like Colorado, Georgia and Utah." Batista added that a wider demand for "public services, such as schooling, policing, and public infrastructure" has led to local governments requiring more revenue to cover costs, which "often leads to higher property taxes."

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He said this trend is "particularly noticeable in areas experiencing rapid growth or where existing infrastructure needs significant upgrades."

Property Insurance

The rise in severe weather due to climate change is the driving factor in home insurance premium increases, experts said. According to Insurance Business, between 2021 and 2023, homeowners paid 19.8 percent more for coverage, increasing from $1,984 to $2,377 on average.

One such example is California, which has been rocked by severe weather events in recent years, including extreme heat waves, wildfires and drought. In January, excessive rainfall in San Diego led to floods that damaged numerous properties.

"In California, homeowners' insurance rates have increased dramatically, and some companies have even stopped issuing policies," Mollo said. "As climate change creates more extreme weather incidents, such as wildfires, homes valued well over a million dollars are too risky for underwriters to take on."

Batista said that "regulators have some control over rate increases but often relent, knowing that too much resistance could lead insurers to withdraw from markets, a tactic that has been described as bullying by consumer advocates." But the main shift causing insurance hikes lies with the probability of natural disasters and extreme weather events causing damage to or destroying homes.

"This dynamic is increasingly challenging as insurers cope with the impacts of climate change, which has fueled extreme weather, costing the U.S. $165 billion in 2022 alone," Batista added.

The rising costs are also causing some customers to forgo insuring their homes entirely. "Customers are finding some relief by shopping around. However, as premiums continue to rise, more people are reducing coverage or forgoing it entirely, a risky move that undermines both personal and community resilience," he said. "This trend is alarming as uninsured rates climb, reflecting a broader issue of affordability and accessibility in the insurance market."

Correction 5/15/2024 7:51 a.m. ET: The spelling of Greg Batista's name was amended.