Industry Round-Up: Decarbonization Challenges, Housing Affordability Crisis, Remote Work Impact, and Rising Home Insurance Premiums

Welcome to our industry news round-up, where we cover the latest real estate trends and location insights.

This week, Jason Stanley, Head of Research at Local Logic, discusses:

  • Challenges of decarbonizing urban areas
  • Rising housing affordability crisis
  • Impact of remote work on cities
  • Soaring home insurance premiums

Residential Construction Trends Reveal Growing Decarbonization Challenge in Urban Areas

Graphs showing Growth rate of single-family and multi-family homebuilding

Source: Eye on Housing


The latest data on residential construction lays bear the challenge we face in decarbonizing the built environment. 

Large and even small metro areas are seeing the steepest decline in both single family and multi-family construction, while outlying and micro counties are holding up best. 

That means more supply is being added in areas where households tend to have no choice but to rely on personal vehicles for their daily needs, often needing more than one vehicle. Homes also tend to be larger and further from amenities and workplaces in these small and less dense communities. 

Even if new homes are built with more sustainable materials, the trend implies a greater reliance on personal transportation, larger homes to heat and cool, etc. Building in this way increases the challenge of decarbonizing the built environment and transportation.

Rising Housing Affordability Crisis: Uninsured Homes Create New Vulnerabilities

Map of Homeowner insurance prices in the United States

Source: Insurify


A good bit of the housing affordability crisis is hiding underwater. 

To make ends meet and avoid being shut out of a home, an increasing number of households are opting out of home insurance given the high and rising cost of premiums.  Many others are losing out on home insurance options, as more and more  insurance companies and policies exit the market.

Although some people are managing to stay in their homes, they are increasing their vulnerability in the process. That’s a new ripple in the affordability crisis waiting to rear its head:

  • Uninsured households are on the rise, according to this recent WSJ  piece.
  • This article in HousingWire addresses the collapse in home insurance policies available to those still looking.  Less competition no doubt contributes to the hefty premium increases that have priced many out.
  • And Insurify modelling predicts an even bigger hike in premiums than last year.

Remote Work’s Uneven Impact on Cities: Small Cities Thrive, Large Cities Struggle

New research on remote work’s impact on cities show sharp contrasts in outcomes between small and large cities, with the latter suffering most.


Graph of downtown traffic in big cities

Source: Financial Times


The graph above shows that downtowns in cities of all sizes experienced similar drops in foot traffic in early pandemic days. However, those in small cities have now recovered to pre-pandemic levels while those in large cities remain mired in half recovery.

This article from Financial Times looks beyond observed foot traffic patterns to estimate welfare gains and losses that have accrued to different cities based on their employment mix, size, etc. The panels below plot these estimates across cities of different sizes.


Graphs showing net welfare changes and sources of welfare changesSource: Monte, Porcher & Rossi-Hansberg (2023)


Given different labor market composition across large and small cities, large cities experienced much greater work commute shifts than did small cities, which has implications for welfare shifts. 

Overall, the research estimates that welfare was 1.7-3.2% higher in the previous commute-intensive equilibrium than in the new remote work equilibrium. 

While households have seen welfare gains from reduced commuting and increased option value, the large drop in wages more than offsets those gains — resulting in overall welfare losses.

Home Insurance Premiums Soar: Florida Homeowners Hit Hard

Bar chart showing US states with highest home insurance costs

Source: Insurify via BBC News


Physical climate risks are causing insurance premiums to spike, but the numbers at the top of this list are still striking. Florida homeowners pay almost twice as much to insure their homes as residents in Kentucky, the 6th most costly state.

Premiums are rising rapidly as well. According to Insurify, premiums are expected to rise 9% nationally this year, after climbing to 7% in 2022. Increases are eye-watering in the places facing the biggest risks. For example, in Louisiana, home insurance costs are up more than 65% since 2021!

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Thao Tram Ngo

September 26, 2023 | 4 minutes read