Rising Insurance Rates Squeezing Affordable Housing Developers

Extreme weather driven by climate change is making it increasingly difficult to build affordable housing, reports Kelly Kenoyer in a piece for WHQR. This is largely because insurance companies are hiking premiums or refusing to cover regions prone to natural disasters.

According to one North Carolina affordable housing developer, premiums have gone up by as much as 70 percent. “Coastal North Carolina is a major retirement hub: The two fastest growing counties in the state, Pender and Brunswick, are next door to New Hanover County, and much of that growth is from retirees. Many of those moving have higher incomes than local residents, which helps drive up market-rate rents: and pushes some locals out of their homes, unless they can find subsidized apartments.”

As Kenoyer explains, “That chilling effect hits tax credit developers more than for-profit developers. After all: market rate developers can just increase rents to cover the rising tides of insurance.” Meanwhile, retirees from around the United States continue to move to disaster-prone areas, keeping demand for housing in coastal areas high. 

The article notes that the federal government could ease the burden on affordable housing developers by standardizing requirements for the various housing programs used by low-income housing builders and incentivizing building climate-resilient properties.