Madison Ventures Managing Director Mitch Rochelle breaks down the housing market on “The Big Money Show” and shares some of the best places to live outside of big cities.
The cost of homeownership in the United States has skyrocketed since 2020, putting a key tenet of the American Dream out of reach for millions of people.
According to new research released by Bankrate, the average annual cost of owning and maintaining a typical single-family home is $18,118, excluding mortgage payments — a staggering 26% increase from just four years ago, when the same cost was about $14,428 per year.
The calculation takes into account the following: Property Taxhome insurance premiums, home maintenance costs, energy, internet and cable TV bills.
“Everything has become more expensive over the past four years,” the report said.
Do you have kids? I’m looking forward to buying a house this year.
April 16, 2024, Homes in the Issaquah Highlands neighborhood in Issaquah, Washington. (Photographer: David Ryder/Bloomberg via Getty Images/Getty Images)
Chronic inflation has increased many of the costs, especially of homeownership. Insurance feeThis is an increase of nearly 40% since 2019.
“Insurance premiums are another pressure point for homeowners,” the report said. “Rising home prices, high construction costs and natural disasters have caused annual premiums to skyrocket.”
Rising home insurance costs could force families to move from 10 states
Though high inflation has slowed, most everyday items remain significantly more expensive than they were just a few years ago, and Americans are finding that the dollar is no longer worth as much as it once was.
Home prices have also skyrocketed in recent years for several reasons.
Years of under-construction created a nationwide housing shortage, then soaring mortgage rates and rising costs of construction materials made the problem worse.
A home under construction in Sacramento, California, on July 3, 2023. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
The supply of homes available for sale remains an astonishing 34.3% down from normal levels before the COVID-19 pandemic began in early 2020, according to a separate report from Realtor.com.
Rising mortgage rates over the past three years are also creating a “golden handcuff” effect on the housing market: Sellers who locked in record-low mortgage rates of less than 3% at the start of the pandemic are becoming reluctant to sell, further restricting supply and leaving eager would-be buyers with few options.
Why can’t I find any homes for sale?
Economists predict mortgage rates will remain high into 2024 before starting to fall. Federal Reserve Interest rates are likely to rise until the Federal Reserve starts cutting them, but even then they’re unlikely to return to the lows seen during the pandemic. Plus, a series of higher-than-expected inflation reports at the start of the year have investors skeptical about the Fed’s ability to raise rates this year.
Photos of homes for sale in Huntington, New York on August 5, 2020. (Thomas A. Ferrara/Newsday RM via Getty Images/Getty Images)
Mortgage buyer Freddie Mac said Thursday Average interest rate for a 30-year loan It fell to 7.09%, down from a peak of 7.79% in fall 2023 but still significantly higher than the pandemic-era low of just 3%.
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A majority of homeowners say they would be nearly twice as willing to sell their home if their mortgage interest rate was 5 percent or higher, according to a separate Zillow survey. Currently, about 80 percent of mortgage holders have interest rates below 5 percent.
