How Rising Insurance Rates Are Changing Homebuyer Decisions

For many buyers, the dream of homeownership is shaped not only by mortgage rates and home prices but also by insurance costs. In 2025, rising insurance premiums are playing a bigger role than ever in how buyers choose where—and what—to buy.

1. Budget Adjustments

High insurance premiums are forcing buyers to rethink their budgets. Even if a home’s price and mortgage payment are within reach, adding hundreds of dollars per month in insurance costs can push it out of affordability.

2. Location Preferences

Areas prone to natural disasters—like hurricanes, wildfires, or floods—are seeing more cautious buyers. Many are choosing homes in lower-risk zones, even if it means compromising on location or amenities, to avoid skyrocketing insurance bills.

3. Older Homes vs. New Builds

Older homes often come with higher insurance premiums due to outdated wiring, roofs, or plumbing. Buyers are increasingly drawn to new construction, which not only meets updated safety codes but often qualifies for lower insurance rates.

4. Impact on Sellers

For sellers, rising insurance costs can make properties harder to move—especially if the home is in a high-risk area or has deferred maintenance. Some sellers are offering credits or updates (like new roofs) to offset concerns and make their homes more attractive.

5. Buyers Doing More Homework

Homebuyers are now digging deeper into insurance quotes early in the process. Instead of waiting until after an offer is accepted, many request quotes before making a decision, ensuring the full monthly cost fits their financial plan.

The Bottom Line

Insurance isn’t just an afterthought anymore—it’s a deciding factor. As premiums rise, buyers are weighing location, home age, and safety features more heavily than ever. For both buyers and sellers, understanding the insurance landscape is now a key part of navigating today’s real estate market.