Home insurance, taxes are surpassing mortgage costs
December 31, 2024
A combination of rising home values and increasing insurance rates has left some homeowners struggling to afford their homes — sometimes paying even more for these expenses than for their mortgage itself.
In September of this year, 32% of the average single-family mortgage payment went to insurance and property taxes — the highest rate recorded in the last decade — according to the Intercontinental Exchange. Note that this analysis is based on those who use escrow accounts to pay their taxes and insurance alongside their monthly mortgage.
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This amount is even higher in some metro areas, with at least a quarter of borrowers in Rochester and Syracuse, New York; Omaha, Nebraska; New Orleans, Louisiana and Miami, Florida shelling out more than half of their monthly mortgage payment for tax and insurance.
Across the U.S., Realtor.com reports that about 9% of single-family mortgage holders pay more than half the amount of their monthly mortgage payment on insurance and taxes. This number is significantly higher than the 4% who reported being in this same situation in 2014.
According to Bankrate, the average U.S. homeowner pays $2,304 to insure their house (with a $300,000 dwelling limit), which is about 20% higher than insurance costs just two years ago.
Metro areas that experience the highest average home insurance rates include:
- Houston, Texas: $5,157 per year for $300,000 dwelling coverage
- Fort Worth, Texas: $3,923 per year
- Dallas, Texas: $3,721 per year
- Chicago, Illinois: $2,934 per year
- Phoenix, Arizona: $2,658 per year
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When dealing with higher-valued properties, of course, the cost of both insurance and property tax increases. Homeowners in the U.S. with dwelling coverage of $450,000 see average rates of $3,118 per year, while those with $750,000 in coverage can expect to pay more than $4,500.
As a result of rising insurance costs, some are choosing to go without coverage in order to afford their homes, which could leave them without the resources to rebuild their home is damaged or destroyed.
According to an analysis of Census Bureau data, around 6.8% of homeowners reported foregoing insurance in 2023, which is down from 7.4% who reported the same in 2021.
However, the proportion of homes going uninsured has jumped significantly in some metro areas. For example, 21.2% of homeowners in Miami went without home insurance in 2023, which is a significant increase from 14.5% in the city who went without in 2021.
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