Home prices hit all-time highs in 2022, with the median price increasing by 50% from January 2020. High mortgage rates have slowed down the housing market considerably, with Redfin predicting that the median U.S. home price could drop by close to 4% in 2023, posting the first year-over-year decline in a decade. Home sales will also decline, falling to the lowest level since 2011, a drop of 30% from 2021.
Pandemic migration hotspots like coastal cities and those in the Sun Belt saw the biggest increases in the housing market frenzy in the aftermath of COVID-19. Home prices in Malibu, California surged by 82% from the first quarter of 2021 to 2022.
Climate-risky areas like the hills of California and oceanfront property in Florida will see prices continue to go up primarily due to high insurance costs.
Insurance premiums in Florida increased by 33% last year, and are expected to go up even more due to Hurricane Ian, the deadliest hurricane to strike the state of Florida since 1935.
Many insurers have stopped issuing policies on high-fire-risk homes in California. This means that the only insurance companies’ homeowners in these areas have to access are two to three times more expensive.