Insurance affects home buying and construction in New Orleans

The state of Louisiana is another one of the places in the United States that has been impacted by insurance prices and rising interest rates, which affect not only homeowners but also those involved in the construction of new homes.

This issue was recently addressed at a meeting of the Home Builders Association, where they discussed the problems and the impact these high costs are having on the current real estate market in the city of New Orleans.

According to statements from the association’s director, it was determined that while the construction industry is now facing several challenges in New Orleans due to increased mortgage rates that slow the normal development of their projects, the new home constructions they are working on are the most durable and, therefore, are receiving the lowest insurance rates.

However, the high costs of insurance rates make their investments, project development, and investment recovery increasingly difficult to achieve. Builders state that these construction risk insurance rates have risen alarmingly, and it should not be forgotten that they, in addition to paying for insurance that allows them to build a property, must then acquire reinsurance on the completed project, which has also increased.

Nonetheless, it’s not only builders who are concerned about rising insurance rates. This is an issue that directly impacts potential homebuyers as well, especially after Hurricanes Laura and Ida hit parts of Louisiana hard, causing insurance premiums to spike.

And while for many buyers, lenders add the cost of homeowner’s insurance to their monthly mortgage bills, experts say that these insurance premiums could be reduced if the homeowner conducts a wind mitigation study on the property, a study that does not require a large budget but could save a significant amount of money. With the results of the study, an insurance company can offer the policyholder attractive discounts on their policies.

Although insurance costs and mortgage rates in the city of New Orleans have made acquiring a new home out of reach for many residents, experts assure that the housing inventory must increase despite this.

Available foreclosures:

New Orleans: 150 homes available.

Jefferson Parish: 75 homes available.

St. Bernard Parish: 30 homes available.

By Elias DaSilva | October 3, 2024.