Home Insurance Costs Finally Slowed in 2025. For East Valley Buyers, the Problem Is Far From Solved.
TEAM CASSELS | EAST VALLEY MORTGAGE
For the first time since 2019, homeowners insurance premium growth decelerated in 2025. That is genuinely good news. The Rate Insurance 2026 Home Insurance Trends Report, analyzing more than 265,000 policies across 100-plus carriers, found the average annual premium rose 9.16% last year, to $2,205. The bad news: premiums have still climbed more than 107% since 2019. And Arizona posted the largest four-year premium increase of any state in the nation. East Valley buyers who are not factoring insurance into their total cost of homeownership are working with an incomplete picture.
AVERAGE ANNUAL HOMEOWNERS INSURANCE PREMIUM — NATIONAL TREND
2019
2020
2021
2022
2023
2024
2025
Source: Rate Insurance 2026 Home Insurance Trends Report — analysis of 265,000+ policies across 100+ carriers. Average premiums are up 107.6% since 2019. Dwelling coverage limits only rose 45.6% over the same period.
The Deceleration Is Real. But 9% Still Hurts.
To understand why the deceleration matters, you have to understand what preceded it. Homeowners insurance premiums increased roughly 18% in 2024 and nearly 20% in 2023. The growth was driven by a combination of climate-related claims, spiking reinsurance costs, rising material costs, and regional risk repricing that had been deferred for years finally arriving all at once.
Rate Insurance President Jeff Wingate described 2025 as the beginning of a stabilization signal. Carriers have returned to rate adequacy, technology is helping them assess risk more accurately, and calmer weather in the latter half of 2025 gave the market a window to steady. That is the most constructive insurance market commentary East Valley homeowners have heard in years.
But 9.16% annual growth is still almost three times the long-run average for insurance costs before the current cycle began. And the coverage gap has been quietly widening: average estimated replacement costs reached $478,000 in 2025, up more than 40% over five years, while average premiums over that period rose more than 107%. Buyers who look only at their insurance premium and not at whether their dwelling coverage limit reflects actual replacement cost are underinsured without knowing it.
Arizona: The State With the Biggest Insurance Cost Problem in the Nation
STATE SPOTLIGHT
Arizona — Highest Premium Growth in the Nation
+94%
Premium Increase
2021 to 2025
#1
Highest in the nation among all 50 states
Arizona's 94% four-year increase was the largest of any state nationally, ahead of Idaho at 88%, Iowa and South Dakota at 83%, and Utah at 82%. Only 11 states saw increases of at least 75% during the same period. Arizona outpaced them all.
The drivers are familiar to East Valley homeowners: extreme heat accelerating roof wear, monsoon wind and hail damage, flash flood risk in low-lying communities, and wildfire interface pressure in outlying areas. Climate-related pricing in Arizona is not a future risk. It is already the current market reality in Mesa, Gilbert, Chandler, Queen Creek, San Tan Valley, and Apache Junction.
Why Insurance Costs Directly Affect Whether You Qualify for a Mortgage
This is the part of the insurance conversation that most buyers do not hear until it is too late. Homeowners insurance is not just an ongoing ownership cost. It is a factor in mortgage qualification. When a loan has an escrow account, the monthly insurance premium is included in your debt-to-income ratio calculation as part of your total housing payment. As insurance costs have risen, that monthly figure has grown, and it has been quietly pushing some buyers out of qualification range or into smaller loan amounts than they expected.
Taxes and insurance now account for 21% of homeowners' monthly mortgage payments across the 450 largest US metros, according to recent analysis. In Arizona, where both property taxes and insurance have risen significantly in recent years, that figure can be meaningfully higher. A buyer who qualifies comfortably based on principal and interest alone may find their DTI pushed above acceptable limits when the full escrow payment is added.
| What Gets Counted in Your DTI | 2019 Impact | 2025 Impact |
| Principal & Interest | Primary driver | Primary driver |
| Property Taxes (escrow) | Rising | Higher still |
| Homeowners Insurance (escrow) | ~$89/mo avg. | ~$184/mo avg. (+107%) |
| HOA (where applicable) | Variable | Variable, rising |
The practical implication for East Valley buyers is straightforward: get an insurance quote before you are deep into a transaction, not after. The premium on the home you are targeting affects your qualification as much as your credit score or your down payment. A mortgage advisor who understands the full PITI payment, including the insurance component, will structure your pre-approval around realistic insurance costs in your target community rather than a national average that may not reflect Arizona's premium environment.
FOR EAST VALLEY REAL ESTATE PROFESSIONALS
Arizona had the highest homeowners insurance premium increase in the nation. Your clients' qualification depends on understanding the full escrow picture before they fall in love with a home.
Real estate agents, financial planners, and attorneys working with buyers across Mesa, Gilbert, Chandler, Queen Creek, San Tan Valley, Eastmark, and Apache Junction: the insurance cost conversation is no longer a footnote. With Arizona posting the largest state-level premium increase in the country, the difference between a well-underwritten pre-approval that accounts for realistic insurance costs and one that does not can mean the difference between a closing and a fallen transaction. Team Cassels builds pre-approvals around the full PITI, including current insurance estimates. Call us before your clients are surprised at the closing table.
FREQUENTLY ASKED QUESTIONS
5 Questions East Valley Buyers Are Asking About Homeowners Insurance Costs
The national average annual premium is $2,205. What should I expect to pay on a home in Mesa, Gilbert, or Chandler?
Likely more than the national average. Arizona posted the largest homeowners insurance premium increase of any state from 2021 to 2025 at 94%. The national average reflects a broad mix of states including lower-risk areas that bring the figure down. In Arizona's desert climate, with its exposure to monsoon wind and hail, extreme heat damage, and flash flood risk in certain communities, your actual premium will depend heavily on the specific home's age, construction, roof condition, and location. The only way to know what you will actually pay is to get a quote tied to the specific property you are targeting, ideally before you are under contract.
How does homeowners insurance cost affect my ability to qualify for a mortgage in the East Valley?
Your lender calculates your debt-to-income ratio using your full monthly housing payment, which includes principal, interest, property taxes, and homeowners insurance. When insurance costs rise, your total monthly payment rises, which raises your DTI. A higher DTI can push you above the qualifying threshold or reduce the loan amount you can access. On a home in Gilbert or Chandler where the annual insurance premium runs significantly above the national average, the monthly escrow addition can be the difference between qualifying at your target price point and needing to look at a lower price range. Your pre-approval should be built around a realistic insurance estimate for the specific market you are shopping in.
The report says premiums are up 107% since 2019 but dwelling coverage limits only rose 45%. What does that mean for my coverage?
It means many homeowners are paying significantly more for coverage that has not kept pace with what it actually costs to rebuild their home. Average estimated replacement costs reached $478,000 nationally in 2025. If your dwelling coverage limit is materially below that, you may be insuring your home for substantially less than it would cost to replace it after a total loss. This gap is worth reviewing with your insurance professional before your next renewal. A claim that exceeds your dwelling limit is paid only up to the limit, and the gap comes out of your pocket.
Does the deceleration in 2025 mean I should expect premiums to stop rising in 2026?
Not necessarily. The deceleration in 2025 reflects carriers reaching rate adequacy after years of underpricing risk, combined with calmer weather in the second half of the year. Many of the structural pressures that drove the increases, climate-related risk in high-exposure states like Arizona, elevated reinsurance costs, and rising material costs, remain in place. Insurance analysts have projected continued increases in 2026, though likely at a more moderate pace than 2023 and 2024. The optimistic signal is that the extreme growth rate appears to be cooling. The conservative expectation is that premiums will continue to rise, just less dramatically.
I am looking at a 20-year-old home in Chandler or a new construction home in Queen Creek. Does age affect insurance costs?
Yes, significantly. Roof age is one of the primary factors in Arizona insurance pricing. A 20-year-old home with an aging roof in Chandler may carry a materially higher premium than a new construction home in Queen Creek with a current roof, modern construction standards, and no prior claim history. Some carriers are reducing coverage or declining to renew policies on homes with older roofs in high-wind areas. This is one of the reasons the total cost of ownership comparison between new construction and resale homes, which we covered in a recent post, extends beyond the purchase price. Insurance costs are part of that calculation and can be a meaningful difference over a ten-year holding period.
YOUR NEXT STEP
Know Your Full Monthly Payment Before You Fall in Love With a Home.
Principal, interest, taxes, and insurance. All four. Team Cassels builds pre-approvals around the real number so East Valley buyers are never surprised at the closing table. Since 2002.
GET YOUR FREE CONSULTATIONVisit teamcassels.com. No pressure. No obligation.