Homeowners insurance premiums are on the rise. Wondering why?
There’s many factors contributing to the rise of home insurance prices.
1. Low housing inventory + high demand
In April 2021, there were 1.16 million unsold homes on the market, down 20.5% from the previous year. That inventory shortage has caused the U.S. median home price to surge 19.1% in the past year.
Colorado specifically has seen a drastic increasing in housing prices. According to the Colorado Association of Realtors, the median Colorado single-family home price topped $500k for the first time in April. Closed sales of single-family homes were up by 34.9%. The median sales price for the Colorado housing market (statewide) was up by 19.5% to $502,000.
2. Skilled labor shortage
The home-building industry is currently facing a shortfall of at least 200,000 skilled trade workers. About 60% of surveyed builders report a skilled labor shortage.
3. High Building Material Costs
Between 2020 and 2021, the cost of construction materials rose 11.9%. Lumber played an outsized role in that increase, rising a staggering 42% over the past year.
According to an article by the Colorado Sun, back in April 2020, builders paid $16,927 for the lumber and manufactured lumber products used to build a single-family home. Now that cost is up $48,136. Add in interest and fees and NAHB calculates that the lumber price hike has added $35,872 to the cost of building a house in the past year.
We will be sure to keep you updated on market trends and changes as they develop. If you have any questions about homeowners insurance or ways to save on your premiums, please contact our office.
Source: Safeco Insurance