Record inflation may raise questions about home ownership Still a good investment.
House prices are rising faster than incomeswhich can be a problem for homeowners because as the value of a home increases, so does the cost of maintaining the home.
More than a quarter of homeowners with mortgages are considered “cost burden,” meaning they spend exceeds 30% of its revenue Housing costs are falling, according to a Chamber of Commerce analysis of 2023 U.S. Census data.
“Unfortunately, many people are unaware that their monthly payments may change when they purchase a home,” said Devon Viehman, regional vice president of the National Association of Realtors.
Experts say the changes in two spending items are particularly surprising.
“What many (homeowners) don’t anticipate are increases in property taxes — which are tied to increases in home values, which helps them in some way — and increases in paying for insurance,” said Bankrate senior economist Mark Mark Hamrick said.
“Paper” Wealth and Rising Expenses
According to statistics, the average single-family homeowner builds $225,000 in wealth from their home in 10 years 2022 report From the National Association of Realtors.
“This wealth mostly comes down to paper wealth, and the time you cash in on that asset is when you sell the home,” Hamrick said.
Property taxes are one of the costs can increase and the value of the home. Homeowners who had their properties reassessed between 2019 and 2023 saw a median tax increase of 25% amid soaring valuations, according to a February 2024 study core logic. During this period, the median annual property tax reassessment in the United States increased by more than $600.
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home insurance is another major expense that can fluctuate after purchasing a home.
There was also one 20% increase Average home insurance premiums will fall between 2021 and 2023, according to insurance comparison company Insurify. Insurify expects rates to rise another 6% by the end of 2024.
Florida, Louisiana, Texas and Colorado saw the largest increases in insurance rates during this period due to extreme weather events.
Florida leads the way. The average annual rate for Florida home insurance is Nearly $11,000 in 2023which is $8,600 higher than the U.S. average. cities in the state Insurify found that 6 of the 10 cities with the highest insurance costs in the country are in China.
more importantly, Home repair costs The increase also affects insurance premiums.
“This will be an area of concern for the foreseeable future because it is a dynamic, unstable and potentially costly environment,” Hamrick said.
Tips for home buyers
NAR’s Weiman advises people to “check with their real estate agent first” when buying a home. She recommends homebuyers ask a real estate agent about the history of expenses associated with owning a home, such as property taxes, insurance, trash removal, water, gas and electric bills.
Home buyers should also find out if the state they want to buy in has any laws limiting annual property tax increases.
Just because you qualify for a $3,000 monthly mortgage payment doesn’t mean you should max out your loan payments now… just a little below that number so you can give yourself plenty of room.
Devon Wieman
Regional Vice President of the National Association of Realtors
A good agent should be able to answer all of these questions for you, Wieman says.
Weiman also recommends leaving room in your monthly budget solution possibilities unexpected expenses.
“Just because you qualify for a $3,000 monthly mortgage payment doesn’t mean you should max it out now,” she said. “If your budget is $3,000, look for something you can get for around $2,500. A little lower than that so you can give yourself room.”
Tips for current homeowners
Homeowners may also consider switching insurance companies if rates are too high.
“You should interview the insurance company,” Wieman said. “Interview everyone. Interview some lenders. Interview some real estate agents. Interview some insurance agents because they all offer different things and you need to find what works best for you.”
watching video Read above to learn more about why home payments are soaring and what homebuyers can do to help navigate this challenging market.
