Is It Too Risky to Own a Home?
Inquiring Minds Want to Know
For many of us, the largest portion of our accumulated wealth is tied up in our homes. The emerging middle class of the 20th century became proud homeowners, a sign that the country was prospering.
But things are getting more complicated these days.
As if the rising house prices aren’t enough of a challenge, getting insured is becoming too expensive. Even when a family comes up with a down payment, the additional cost of insuring the house often makes buying a home impossible.
Yet, without insurance, the bank will not loan home buyers the money to make their purchase.
That’s not all, however. Last spring I received my annual homeowners insurance bill. It’s a bundled policy that also covers my car. I was surprised when I saw my bill, which is an understatement. My premium had gone up almost a thousand dollars. I’ve never been late on a payment and have never made a claim. I was stunned. So, I began searching for a new company to cover me.
Thankfully, I found a company that offered me coverage at a lower rate.
Lucky me. I live in a region of the United States that hasn’t been hit hard by extreme weather for a while. But that’s not true of homeowners in other locations. Florida, Texas, Georgia, the Carolinas, Louisiana, and California to name a few have endured either fires or one hurricane after another resulting in billions of dollars worth of damages. Insurance companies are losing money in these regions and leaving the state altogether.
I contend that I’m picking up some of their losses and so are you.
I’m noticing that insurance companies use words like climate change when determining the possibilities of losses. Where once those words were avoided, allowing people to continue to live in denial, businesses are now paying attention. Why? Money. Americans live in a culture that only cares about one thing. MONEY! So when businesses feel the sting of climate change and are no longer making the profits they once were, climate change becomes a dire reality.
This article isn’t about climate change per se, however.
Instead, I’m exploring the possibility that owning a home could be a liability. Insurance companies have pulled out of hurricane and wildfire-prone states. They have also upped their rates many times over, and when it’s time to make a claim are reluctant to pay. Many homeowners have lost their homes and struggled to get an insurance claim honored.
To top it off, insurance companies don’t cover as much as they once did.
For example, to get flood coverage, one must buy a separate policy. If you scroll down to the bottom of the page on Realtor.com, you’ll find that they now rate a home’s flood risk. Words like “this home’s chances of flooding are increasing” should be a warning to prospective buyers. You will need two policies if a bank agrees to finance the house.
Separate flood insurance is an added expense.
Furthermore, even areas that aren’t high risk come with grim possibilities. The world is dealing with storm events these days that drop 10 or more inches of rain in 24 hours. Our old systems in towns and cities that handle runoff were never designed to manage that much water. Unexpected catastrophic events are hitting areas that are not considered flood risks, catching homeowners off guard and completely unprepared for severe damage.
Money down the drain is becoming a reality.
I expect things to get worse, not better. More damage means higher premiums and higher premiums mean more uninsured homes. When a person has a large portion of money tied up in their home, losing it to a catastrophic event is devastating.
So where do we go from here?
I’m not sure. There’s a part of me that wants to sell and get out from under the burden of maintaining a house and its contents. I carry insurance. That doesn’t give me the peace of mind it once did. I’m crossing my fingers, hoping that no catastrophic event ruins my life.
I’m also retired and old enough to know that my days on this planet are numbered.
Maybe I should get out while the going is good. Should I sell and downsize into a nice little rented 55+ apartment rather than ride this thing out?
What do you think?
Teresa is an author and professional myth buster. You can find her books on Amazon.
