Many Houston homeowners are facing a sudden spike in monthly housing costs due to sharply higher insurance premiums and property taxes. Even if you haven’t changed anything about your home, you might find yourself paying hundreds more each month than you were a year ago. For landlords, especially those with just one or two properties, these higher costs are making it harder to turn a profit.
Insurance premiums across Houston have jumped by 30% or more for many homeowners, often without warning. Some major insurers have stopped writing new policies in the region, forcing residents to seek coverage from less familiar companies at higher rates. At the same time, property tax bills have climbed as assessments caught up with home values that soared during the pandemic. Even as the real estate market has cooled, many homeowners are still paying taxes based on those inflated valuations.
Mark Lee, co-founder of Absolute Properties in Houston, works with homeowners and small landlords who are struggling to keep up. He sees the effects firsthand: “Property taxes going up and insurance going up – that’s been compressing it for landlords.” For those with equity, selling can be a way out. For others, options are limited.
Insurance Premiums Driven by Weather Risks and Fewer Carriers: Insurance companies have raised rates across Texas in response to a rise in claims from severe weather, including hurricanes, floods, and hailstorms. The increasing frequency and cost of these disasters have led some insurers to reconsider their exposure in the Houston area. As a result, several major carriers have pulled out or stopped offering new policies in certain neighborhoods. Homeowners are often shocked to receive renewal notices with increases of $1,000 or more, or to learn that their longtime insurer is leaving the market.
Property Taxes Reflect Pandemic-Era Valuations: During the pandemic, home values in Houston and surrounding areas rose, prompting local tax authorities to raise property assessments. These higher assessments have stuck, even though home prices have now flattened or, in some cases, declined. That means many homeowners are still paying property taxes based on last year’s peak values, resulting in higher escrow payments and monthly costs.
Small Landlords Are Feeling the Pinch: For landlords managing only a few properties, the combined effect of higher insurance and property taxes can quickly erase profits. An extra $300 or $400 in monthly expenses can turn a cash-flowing rental into a break-even or loss. Lee notes that some landlords are choosing to sell while they still have equity, rather than continuing to absorb rising costs and manage tenants. “We do see landlords sell, especially if they have equity,” he says.
If You Own Your Home: Start shopping for a new insurance policy at least 60 days before your renewal date. With some carriers exiting the market, waiting until the last minute could leave you with limited options and higher rates. Get quotes from at least three insurers and ask about any discounts available for recent upgrades, such as a new roof, updated electrical systems, or storm-resistant windows and shutters. These improvements can sometimes lower your premium.
Consider raising your deductible to reduce your annual premium, but make sure you have enough cash on hand to cover the higher out-of-pocket cost if you need to file a claim. For example, switching from a $2,500 to a $5,000 deductible might save you several hundred dollars a year, but you must be prepared to pay that amount if disaster strikes.
If You’re a Small Landlord: Recalculate your rental income against all expenses, including mortgage, property taxes, insurance, and ongoing maintenance. If higher costs are eroding your profit or pushing you into the red, selling your property could be a prudent move, especially if you have built up equity. This allows you to exit before costs rise further and avoid the stress of managing tenants in a tighter financial environment.
If you don’t have much equity, holding onto the property and continuing to rent it out may be your only viable option until the market improves. Be sure your rental income covers all expenses, and budget for unexpected maintenance or vacancy periods.
If You’re Buying a Home: Request an insurance quote before making an offer, not after you’re under contract. Insurance costs can vary widely depending on the neighborhood, property age, and flood risk. Some homes in Houston are much more expensive to insure than others, and you need to know the true monthly cost before committing to a purchase.
Make sure to factor both insurance and property taxes into your budget. Don’t rely on outdated or overly optimistic estimates; use actual quotes and current tax assessments to calculate what you’ll pay each month.
Insurance and property tax costs in Houston have become major factors in homeownership decisions, not just minor details. Whether you’re a homeowner, landlord, or buyer, it’s critical to obtain updated quotes, understand your true monthly costs, and plan for potential future increases. The old assumption that your policy and tax bill will stay the same no longer holds.
Lee sums up the new reality: “It’s gotten harder with property taxes going up and insurance costs rising.” Before you make a move — whether buying, selling, or renewing — run the numbers and know exactly what you can afford. Staying informed and proactive is the best defense against surprise expenses in today’s Houston housing market.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
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