For many Texas homeowners, the annual insurance renewal has become a moment of unease.

A premium increase can mean hundreds — sometimes thousands — of additional dollars a year. For families across the Austin area, those increases matter well beyond the insurance bill itself. They can raise monthly housing costs, squeeze household budgets and make an already expensive housing market even harder to navigate.

New research from Rice University’s Kinder Institute for Urban Research puts numbers behind what many Texas homeowners have already been feeling, including those in Homestead Estates.

Between 2009 and 2024, the average homeowners insurance premium in the median Texas county increased 74% after adjusting for inflation, while median household income increased only 11%, according to the Kinder Institute report, The Insurance Squeeze: Rising Premiums, Affordability, and Income Inequality Across Texas Counties Since 2000.

That widening gap is making insurance an increasingly important part of Texas’ housing affordability story.

Insurance Is Taking a Bigger Bite Out of Household Budgets

In 2009, homeowners insurance represented about 2.93% of median household income in the typical Texas county.

By 2024, that figure had climbed to 4.65%. For households earning 80% of their county’s median household income, insurance premiums accounted for about 5.81% of household income.

The increases have accelerated in recent years.

Texas’ median homeowners insurance premium increased 18% from 2022 to 2023 and another 16.2% from 2023 to 2024 in nominal dollars. Even after adjusting for inflation, the increases were 13.4% and 12.9%, respectively.

The Kinder Institute analysis also found that approximately 7.04 million Texas households — about 64% of households statewide — could not afford the median-valued home in their county in 2024 when insurance and other housing expenses were included and affordability was measured using the commonly used threshold of spending no more than 30% of gross income on housing.

Researchers modeled how additional insurance increases could deepen that pressure. A 4% increase in premiums could make a median-valued home unaffordable for an additional 20,077 Texas households, while a 10% increase could add nearly 49,900 households to that total.

Those figures are estimates, not predictions that a specific number of families will move or stop buying homes. They do, however, show how sensitive housing affordability has become to insurance costs.

Austin Has the Largest Affordability Gap Among Texas’ Biggest Metros

The Kinder Institute findings are particularly relevant for Austin-area homeowners because the region already carries one of the largest housing affordability gaps in Texas.

For the Austin-Round Rock-San Marcos metropolitan area, researchers calculated a 2024 homeownership affordability gap of approximately $191,962 — the largest among the state’s 10 biggest metropolitan areas.

The analysis placed median household income at $100,431, median home value at $465,000 and average homeowners insurance premiums at $2,776 across the metro area.

The affordability gap represents the difference between what a household can reasonably afford under the study’s assumptions and the median home value in that market.

It does not mean every Austin-area household faces the same shortfall. Home values, household income, property taxes, deductibles and insurance costs can vary substantially from one neighborhood and household to another.

Still, the figure helps illustrate how carrying costs such as insurance can compound affordability challenges in a market where home prices are already high.

Several Austin-Area Counties Rank Among Texas’ Largest Affordability Gaps

The Kinder Institute report also shows that Austin’s affordability pressures are not confined to the city itself.

Among the 10 Texas counties with the largest homeownership affordability gaps in 2024, several were in the Austin region or nearby Hill Country communities.

Travis County had an estimated affordability gap of $251,560, with median household income of $99,611 and median home value of $523,000.

Blanco County had an estimated gap of $233,328, while Hays County showed a gap of $158,321 and Williamson County a gap of $143,799. Llano County also appeared among the state’s largest county-level affordability gaps.

Those numbers reinforce a broader reality for Austin-area homeowners and buyers: affordability pressures extend well beyond the urban core and increasingly affect suburban and surrounding communities as well.

What Is Driving Higher Texas Home Insurance Costs?

There is no single cause behind rising homeowners insurance premiums.

The Kinder Institute report points to a combination of catastrophic weather, litigation patterns and broader structural cost pressures over time. It also identifies major premium increases following periods of severe Texas weather, including Winter Storm Uri and Hurricane Beryl.

Insurance prices can also vary based on rebuilding costs, a home’s location and characteristics, the amount and type of coverage purchased, deductibles and claims history.

That means two homes in the same Austin-area community can receive noticeably different quotes.

The statewide pattern, however, is clear: premiums have risen much faster than household income over the past 15 years.

Rising Premiums Do Not Affect Every Household the Same Way

One of the Kinder Institute report’s more consequential findings involves income.

Researchers found that higher-income households were generally better positioned to absorb premium increases. During portions of the study period, homeownership continued to grow among households earning more than 120% of their county’s median household income despite higher insurance costs.

Lower- and moderate-income households showed more vulnerability.

For households earning up to 120% of median income, researchers found periods in which accelerating premium increases were significantly associated with declining homeownership rates. The report cautions that the relationship became less clear between 2019 and 2024 as pandemic-era migration, historically low mortgage rates and other housing-market forces complicated the picture.

For the Austin area, where both incomes and home values can vary sharply between communities, that distinction matters. A household with greater financial flexibility may be able to absorb a large insurance increase without changing its housing plans. A family already spending close to its limit may have fewer options.

What Austin-Area Homeowners Can Do

Homeowners cannot control statewide insurance trends, but they can take steps to better understand what they are paying for and whether more competitive options are available.

The Texas Department of Insurance recommends shopping around rather than automatically renewing the same homeowners policy each year. Consumers can compare companies, sample rates, complaint histories and financial information through HelpInsure.com, a resource provided by TDI and the Office of Public Insurance Counsel.

Homeowners should also ask insurers about available discounts, including those tied to security or fire alarm systems, bundling multiple policies or maintaining a claims-free record.

Changing the deductible may reduce a premium, but homeowners should consider whether they could realistically afford the higher out-of-pocket amount after a covered loss.

Coverage details matter as much as price.

Homeowners should review whether their policy pays replacement cost or actual cash value. Replacement cost coverage generally pays based on the current cost to repair or replace damaged property, while actual cash value coverage accounts for depreciation and can leave the homeowner responsible for more of the repair bill.

Texas law does not require homeowners insurance, but mortgage lenders generally require it while a loan remains outstanding. Homeowners should also remember that standard homeowners policies generally do not cover flooding, which typically requires separate flood insurance.

Before switching insurers, homeowners should confirm that a new company is licensed, review its complaint history and make sure replacement coverage is active before canceling an existing policy.

Insurance Is Becoming Part of Austin’s Larger Housing Conversation

The Kinder Institute for Urban Research, part of Rice University, studies housing, neighborhoods, affordability, resilience and other issues affecting communities across Texas. Its latest report draws on Texas Department of Insurance data from 2000 through 2024 and U.S. Census Bureau housing and demographic data covering all 254 Texas counties.

The report does not suggest that insurance alone is responsible for Austin’s affordability challenges.

Home prices, mortgage rates, property taxes, maintenance costs and household income all play major roles.

But as insurance takes a larger share of household income, it is becoming harder to separate the cost of insuring a home from the broader question of whether families can afford to buy — and continue owning — one.

As insurance costs and Central Texas housing conditions continue to change, My Neighborhood News will continue following developments that could affect homeowners, prospective buyers and neighborhood affordability across the Austin area.

By Tiffany Krenek, My Neighborhood News 

Tiffany Krenek has been on the My Neighborhood News team since August 2021. She is passionate about curating and sharing content that enriches the lives of our readers in a personal, meaningful way. A loving mother and wife, Tiffany and her family live in the West Houston/Cypress region.

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