Housing affordability conversations usually center on home prices, mortgage rates and property taxes. None are the fastest-growing fixed cost of owning a Texas home.
In our statewide poll last fall, nearly four in five Texas voters said their property insurance costs had gone up over the past five years. After adjusting for inflation, homeowners insurance premiums in Texas rose 13.4% in 2023 and another 12.9% in 2024 (TDI premiums, CPI-U adjusted). Most of what Texans are feeling happened in the last two years.
Insurance premiums rising much faster than household income
To better understand what has actually happened to the cost of insuring a Texas home, Texas 2036 partnered with the Kinder Institute for Urban Research at Rice University to pair 25 years of Texas Department of Insurance premium records with Census data on income, home values and homeownership across all 254 Texas counties. Click here to read the report.
The average homeowners insurance premium in the median Texas county rose 74% between 2009 and 2024 after adjusting for inflation, from about $1,717 to $2,983 in constant 2024 dollars. Median household income rose 11%. The last five years are steeper: premiums up 30%, income up 3%.
Rising premiums translate into higher housing costs. In 2009, the average premium equaled 2.9% of median household income. By 2024 it reached 4.7% — and 5.8% for households earning 80% of the county median income.
Insurance costs can price out would-be homeowners
Housing generally reaches unaffordable levels when it consumes more than 30% of a household’s gross income — the standard cost-burden threshold. When applying this affordability threshold to principal, interest, property taxes, mortgage insurance and each county’s actual average premium, an estimated 7.04 million Texas households, about 64%, could not afford the median-valued home in their county in 2024. Holding everything else constant, a 4% premium increase would price out roughly 20,000 more households; a 10% increase, about 50,000. Insurance is now a large enough share of housing costs that a change in premiums alone can shift how many households can afford to buy.
One finding surprised us: across 254 counties, rising premiums showed no stable correlation with homeownership or insurance coverage rates. County-level correlational analyses may not be able to detect these patterns, however. It is also possible that households are keeping their homes and coverage and absorbing the cost elsewhere in their budget — reducing spending on other basic needs or delaying financial goals — economic trade-offs that this study was not designed to capture.
The cost of homeowners insurance is emerging as one of several affordability-related issues for the next legislative session. Whatever proposals take shape, they will need baseline data to work from. The findings from the Kinder Institute’s report provide a useful starting point.
This blog draws on The Insurance Squeeze: Rising Premiums, Affordability, and Income Inequality Across Texas Counties Since 2000, authored by Aram Yang, Caroline S. Cheong, Michelle Smirnova and Stephen Averill Sherman of the Center for Housing and Neighborhoods at the Kinder Institute for Urban Research, Rice University, and sponsored by Texas 2036.
