For many years, Americans have valued owning a home due to its financial advantages. It has traditionally been a reliable way for individuals to accumulate wealth. The common belief was that by securing a fixed-rate mortgage, monthly housing expenses would remain predictable.

However, this perspective is being challenged as homeownership expenses continue to rise sharply. Climate change, escalating home prices, and various other factors are driving up the costs of property insurance nationwide, along with increasing property taxes and utility bills. A recent report confirms that these variable expenses are taking a bigger bite out of homeowners’ monthly budgets.

According to Andy Walden, vice president of research and analysis at data provider ICE, “Costs that fluctuate, such as taxes and insurance, now account for nearly one-third of the average mortgage payment across the U.S. In high-risk regions and those with elevated property taxes, these variable costs can constitute almost half of a homeowner’s monthly expenses, not including other fluctuating costs like utilities and transportation.”

The October 2024 Mortgage Monitor report from ICE presents clear statistics illustrating this issue. On average, property insurance costs have surged by 52% since 2019, with some Florida metropolitan areas witnessing nearly a 90% increase in insurance costs. Notably, this trend isn’t confined to regions prone to hurricanes; for instance, Des Moines has seen a 67% jump in premiums due to the risk of tornadoes and hail.

The national average for property insurance was reported at an all-time high of $181 per month as of July, and insurance premiums now represent approximately 9.4% of homeowners’ total monthly expenses.

At Neighbors Helping Neighbors, a housing nonprofit based in Brooklyn, counselors are increasingly supporting clients grappling with surging living costs. The rise in homeowners’ insurance premiums, property taxes, utility costs, and specific coverage like flood insurance is becoming overwhelming.

The organization assists not only those still paying off mortgages but also homeowners who fully own their properties, as stated by Katelyn Gravell, a counselor at the organization.

“Some homeowners, particularly the elderly who don’t have a mortgage, are struggling to keep up with their basic expenses,” Gravell informed.

ICE’s Walden emphasizes the difficulties faced by homeowners on fixed incomes, but he also points out that those who are heavily relied on loans—especially borrowers with high-interest rates—are finding it increasingly hard to meet their payment obligations.

This evolving reality of fluctuating homeownership costs suggests that mortgage lenders and investors may need to reassess their approach to risk, according to Walden’s insights shared with YSL News.

Previously, the emphasis was on assessing borrowers’ financial circumstances and risk profiles at the time of loan origination. Now, the task will be to gauge how those risks and the “increasing climate and hazard-related dangers” to the property evolve post-purchase, he explained.