Federal Reserve property-level data suggest landlords absorb nearly three-quarters of higher insurance costs through lower net operating income. Property insurance has become substantially more expensive for apartment buildings. But the more interesting question is who actually bears the cost.
Federal Reserve researchers analyzed borrower-reported operating statements for roughly 24,000–28,000 multifamily properties annually across more than 150 U.S. metros. From 2019 to 2024, real insurance expense increased by more than 75%.
Very little of that increase appears to have been recovered through higher rental revenue. The researchers estimate that each additional dollar of insurance expense was associated with about 74 cents of lower net operating income, the income a property generates before financing costs.
That suggests rising insurance is landing first on property economics rather than being passed directly through to tenants.
The read
The greatest impact is capital, not rent. If owners are absorbing most of the insurance shock through lower NOI, the cost does not disappear simply because tenants are not paying it immediately. It depresses property value, debt capacity, and equity returns. The next test is behavioral: do lenders lend less, buyers pay less, owners invest differently, or projects stop penciling in markets where insurance costs are rising fastest? That is where an operating-cost shock would become a housing constraint.