The report added that the situation is a “ climate change-driven crisis in homeowners ’ insurance .” Other factors are also causing gridlock in the slow-moving housing market . In December , The Wall Street Journal reported that the cost of taxes and insurance are now exceeding surging mortgage payments for many houses .

The Senate committee tracked data on homeowners ’ insurance non-renewals at the county level from all 50 states , data provided by insurance companies covering the years 2018 and 2023 . The study was begun in the fall of 2023 and the Budget Committee maintains it is the first survey of its kind ever conducted . The data , according to a committee spokesperson , is not available anywhere else . It covers 249 million policies over the six-year period . The committee tracked non-renewal data for nearly two dozen insurers that represent about 65 % of the total market .

The decision to focus on rising non-renewal data was based on warnings from insurance industry experts who argue that , while rates of non-renewals remain low in “ absolute terms ,” they are often “ an early sign of market destabilization ,” the committee said .

The highest non-renewal rates are occurring in states and counties prone to hurricanes , wildfires and other climate disasters , according to the committee . However , the report found that the non-renewal phenomenon was not confined to states such as Florida , California and Louisiana , which it called the “ canaries in the coal mine .” In fact , many other regions across the country are now experiencing similar problems . “ The committee ’ s data make clear that areas such as southern New England , parts of Montana , coastal and inland North Carolina , coastal regions of New Jersey , New Mexico , South Carolina , and even Oklahoma , among others , are not far behind ,” the committee said .

It added that a close examination of non-renewal data could provide a glimpse of specific markets where home prices could be particularly vulnerable . This , in turn , could influence lenders ’ willingness to offer mortgages .

Since the Federal Reserve began raising interest rates in 2022 , housing and mortgage affordability have become serious impediments for prospective home buyers . Moreover , existing homeowners who locked in ultra-low mortgage rates during the pandemic are often unwilling to relinquish them . Finally , the supply of new homes has been constrained since the housing crisis of 2008 .

“ Climate change is not just about polar bears and melting icebergs anymore ,” said Sen . Sheldon Whitehouse , a Democrat from Rhode Island and chairman of the Budget Committee , in released comments . “ It ’ s also about climate-flation bleeding family budgets — with higher costs for insurance , groceries and healthcare — and cascading economy-wide shocks .”

The report found that the non-renewal phenomenon was not confined to states such as Florida , California and Louisiana , which it called the “ canaries in the coal mine .”

How would such a property crash play out ? Whitehouse offers a scenario that depicts a chain-linked series of setbacks , but one that is not completely improbable , saying , “ What our new data reveal is that the failure to deal with climate change is also affecting whether families can even get homeowners ’ insurance , which threatens their ability to get a mortgage , which spells trouble for property values in climate-exposed communities across the country .”

— Evan Simonoff

JANUARY / FEBRUARY 2025 | FINANCIAL ADVISOR MAGAZINE | 11