1 big thing: All Home Insurance Rates Are Not Created Equal
Insurance companies are charging homeowners in the middle of the country and parts of the Southeast more than homeowners with similar levels of climate change risk, the New York Times has uncovered.
Why it matters: This type of disparity is bad at both ends of the market.
Homeownership may become unaffordable where insurance rates exceed actual risk.
Meanwhile, buyers may be drawn to places with lower rates but significant risk—a decision that could lead to financial ruin.
Striking disparity: The numbers show that homeowners are paying more than twice as much for insurance, as a share of home value, than people who live elsewhere with a similar risk of climate change-related severe weather.
What they’re saying: Why the disparity? Industry experts offer several reasons, including—
Rural states are less densely populated, meaning they have fewer homeowners and less risk-sharing
Insurance fraud rates vary by state
Reinsurance costs are going up in some places more than others
Different state requirements for government-mandated, high-risk insurance pools
One more culprit: States that don’t question or push back against rate hike requests from the insurance companies have higher premiums than states that actively try to keep residents’ rates as low as possible.
Regulation roulette: A 2022 Harvard Business School working paper found that after national insurers experienced big losses in tightly regulated states, they raised rates in more loosely regulated states.
Premiums outpacing inflation: Between 2020 and 2023, the average premium jumped 33 percent—far more than the inflation rate.
Side by side: Benjamin Keys (University of Pennsylvania’s Wharton School) and Philip Mulder (University of Wisconsin School of Business) found that in 2023:
The typical American household paid about $500 in premiums for every $100,000 of home value (0.5%).
In California, many homeowners paid as low as 0.05% of home value.
In parts of Alabama, Oklahoma, Louisiana, and Texas, the average homeowner paid more than 2% of home value.
What’s next: Some analysts suggest transparency and regulation are the solution, and Congress is holding hearings on the subject. So far, there’s no consensus on how to make the situation more fair to homeowners.
The bottom line: When climate change starts hitting closer to home, the disconnect between premiums and actual risk could trigger housing market meltdowns in places seeing a high rate-to-risk ratio.
2. Record Number of Fair Housing Complaints Last Year, Again
For the third consecutive year, the National Fair Housing Alliance has reported a record number of fair housing complaints.
Why it matters: The high number of complaints indicates that housing discrimination is still a very real problem.
Year-over-year increase: From 2002 to 2003, NFHA complaints increased:
2022: 33,007
2023: 34,150
What they’re saying: “Noticeably steep increase.” — Complaints regarding harassment based on color or race showed exceptionally large increases:
Color: 470.59%
Race: 114.97%
Where complaints are being filed: NFHA reports that fair housing complaints are processed by:
Private nonprofit housing organizations: 75.52%
State and local level FHA program agencies: 19.26%
U.S. Department of Housing and Urban Development: 5.10%
U.S. Department of Justice: 0.12%
These numbers skew low, though, because many incidents go unreported, either because:
They’re difficult to document, or
People worry they’ll be evicted or retaliated against if they file a complaint
Fair housing advocates respond: NFHA president and CEO Lisa Rice says the rise in complaints means that the government isn’t “doing enough to provide adequate resources” for state and local organizations to:
Educate the public about fair housing laws, and
Help people when civil rights are violated
The bottom line: Those involved in rentals, sales, lending, and insurance are in a prime position to help eradicate housing discrimination by staying up-to-date on fair housing laws and educating clients in the sphere.
Also, landlords should consider obtaining a Tenant Discrimination Liability policy to hedge against potential claims from tenants.
And — of course — use a professional REALTOR to avoid accidentally discriminating against buyers, sellers, borrowers, and tenants.
Vas Persaud of Ecovision Homes is this week’s guest on the Trust This podcast.
We discuss the concept of “workforce housing” and how it encompasses energy efficiency, climate hardening, and health-focused amenities and associations to keep construction and maintenance costs as low as possible.
It all comes together to help those in the workforce to afford a piece of the American dream.
3. Catch up fast
Jobless claims dropped more than expected this week, driving a stock market rally yesterday after a steep decline on Monday. Bloomberg (gift link good for 7 days)
Mortgage interest rates drop to less than 6.5% for a 30-year mortgage, their lowest rate in 15 months.
The week started with a stock market sell-off that fueled speculation that the Fed could reduce its lending rate by 100 basis points between September and the end of 2024. CBS News
Mortgage loan application activity increased almost 7% last week over the preceding week. WRE News
Orlando, Jacksonville, and Tampa led the nation in June with the highest percentage of real estate purchase contract cancellations. Redfin
Real estate commissions drop ahead of rule changes. Axios
4. Closing Thought
Every business rises or falls on its founder’s vision.
Why it matters: A clear vision is the cornerstone of any successful small business.
It defines your purpose, guides decision-making, and unites your crew.
Without it, your business risks drifting off course, losing focus, and failing to inspire employees and clients.
Developing Your Vision Statement
Get to the core: Understanding your core beliefs starts with crafting a meaningful vision statement.
What are some of the generation-to-generation themes in your family’s history?
What drives you?
What impact do you want your business to have on the world?
This isn’t just about profit—it’s about the deeper purpose that motivates you and your crew daily.
Reflect: Spend time considering your values and what you believe your business can uniquely contribute.
Engage others: Involve key stakeholders in this process, including your leadership team and clients. Their perspectives can offer valuable insights and help ensure your vision resonates broadly.
Be specific: Your vision statement should be clear, concise, and focused on a tangible aspiration. Avoid vague language; instead, articulate an inspiring and actionable vision.
What’s next: Infusing Vision into Your Business
Walk the talk: A vision statement is only as powerful as its implementation. Making your vision a living part of your business requires embedding it into every aspect of your operations.
Communicate consistently: Regularly reinforce your vision in meetings, marketing materials, and internal communications. This ensures that everyone in your organization is aligned with the same goal.
Lead by example: Your actions should reflect your vision. When leaders embody the company’s vision, it sets the tone for the entire organization.
Measure and adjust: Continuously evaluate how well your business adheres to its vision. Be prepared to make adjustments to stay aligned with your core purpose. Hire, promote, and fire to the vision.
The bottom line: A well-developed and articulated vision guides your business, inspires and unifies your team, and creates a strong foundation for long-term success.
We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
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