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Surge in Foreclosure Filings Linked to Rising Home Insurance Costs in Southern Cities
Picture this: several Southern cities, already grappling with their fair share of weather theatrics, are now seeing a spike in foreclosure filings. Why, you ask? Well, it seems that ballooning home insurance costs are putting a squeeze on homeowners’ wallets.
Recent data from ATTOM paints a grim picture, with Houston experiencing a whopping 36.5% surge in the first quarter alone! Other cities aren’t faring much better—Orlando is up by 28.1%, Tampa by 20.9%, and Miami by 18.8%. It’s like watching popcorn pop, but less fun.
According to a Bloomberg analysis of the ATTOM data, rising property taxes and insurance rates are the likely culprits stirring up this foreclosure soup.
Link Between Costly Insurance Premiums and Foreclosures Expands Beyond Florida and Texas
Think it’s just a Florida and Texas problem? Think again. New Orleans residents are staring down the barrel of doubled insurance premiums, with Habitat for Humanity noting over 100 foreclosure stories. Nationwide, home insurance has jumped 20% since 2021, projected to hit a steep $2,522 in 2024, according to Insurify. Ouch!
The Correlation Between Rising Home Insurance Costs and Foreclosures
Benjamin Collier, a know-it-all (in a good way!) professor at Temple University, explains that unexpected hikes in expenses are often the villains behind foreclosures. Systemic issues usually show up as sharp spikes in filings across regions or cities. Basically, when insurance costs suddenly jump by about 25% year after year, it’s less “surprise!” and more “not again…”.
Professor Collier’s insights, coupled with preliminary research, suggest a growing pain point in household budgets, particularly in areas like sunny California, where cities like San Francisco and Sacramento are also seeing foreclosure upticks.
Exploring the Underlying Reasons for Increased Foreclosure Filings
Rob Barber, the big boss over at ATTOM, scratches his head over the exact causes of the rising foreclosures. While it could be a backlog from lenders clearing their desks, there doesn’t seem to be a direct link to unemployment or drops in home equity. Basically, it’s a bit of a mystery still wrapped in an enigma.
Here’s a look at the 12 metro areas feeling the foreclosure heat:
- Boston-Cambridge-Newton, MA-NH — 1,086 filings (+47.8%)
- San Francisco-Oakland-Hayward, CA — 1,188 filings (+39.9%)
- Houston-The Woodlands-Sugar Land, TX — 3,020 filings (+36.5%)
- Sacramento-Roseville-Arden-Arcade, CA — 811 filings (+32.1%)
- Orlando-Kissimmee-Sanford, FL — 1,403 filings (+28.1%)
- Tampa-St. Petersburg-Clearwater, FL — 1,426 filings (+20.9%)
- Miami-Fort Lauderdale-West Palm Beach, FL — 3,011 filings (+18.8%)
Despite these spikes, the national foreclosure rate is still chilling at just 0.3%, per the latest CoreLogic report.
Adapting to High Home Insurance Costs: Homeowner Strategies
In the face of soaring premiums, some homeowners are hiking their deductibles, thinning their coverage, or—in a dicey move—skipping insurance entirely. It’s like playing financial Russian roulette, especially in disaster-prone areas.
According to the Insurance Information Institute, about 12% of homeowners went bare in 2023. Meanwhile, findings from ClaimGuide.org reveal that one in five would drop coverage if they could. As per a groovy study by Redfin, this financial pressure cooker has even pushed about 12% of Floridians to pack up and move, looking for greener, less expensive pastures.
Further Insights and Resources
- Explore the Top Homeowners Insurance Companies of 2024 [insert link]
- How to Find Affordable Homeowners Insurance in Today’s Market [insert link]
- The Most Expensive States for Home Insurance in 2024 [insert link]
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