Understanding the Rising Costs of Homeownership in the US

FILE – A home for sale, under contract, on Center Street in Patchogue, New York on May 17, 2022. (Steve Pfost/Newsday RM via Getty Images)

Homeowners have faced a sharp rise in monthly costs over the past five years, reaching new highs just last year. The median monthly cost of homeownership in the United States increased to $2,035 in 2024, which is up from $1,960 in 2023.

A recent report by the U.S. Census Bureau found that the combination of mortgage rate increases and higher insurance fees, and just an increase in costs in general, are to blame.

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What they’re saying: “One way we measure housing affordability is based on how much households spend on selected costs such as mortgage payments, insurance, taxes, utilities, and various fees,” said Jacob Fabina, a Census Bureau economist. “In 2024, the median percentage of income householders with a mortgage spent on these costs was 21.4%, which points to an increased burden on homeowners.”

States with the Highest Monthly Mortgage

By the numbers:

• California: $3,001
• Hawaii: $2,937
• New Jersey: $2,797
• Massachusetts: $2,755
• D.C.: $3,181

Dig deeper: In several metro areas, including San Francisco, Los Angeles, New York and Boston, the annual income needed to afford a median-priced home tops $200,000. In San Jose, it’s more than $370,000.

Rock-bottom mortgage rates turbocharged the housing market during the pandemic, fueling bidding wars for homes that pushed up sale prices, sometimes hundreds of thousands of dollars above a seller’s initial asking price. U.S. home prices soared more than 50% between 2019 and 2024.

The Impact on Homeowners and Renters

What’s more, out of the 21.6 million homeowners in the U.S., about 86.6 million paid either a condo or HOA fee, according to the Census. The monthly average condo or HOA fee in 2024 was $153.

At the same time, renters were also hit with higher costs. The median gross rent, which includes the cost of utilities, increased 2.7% to $1,487 in 2024 from $1,448 in 2023, adjusted for inflation, according to the ACS.

Meanwhile, the median percentage of income going toward rent did not increase in 2024, staying at 31%.

Consequently, the median household income increased in 29 states from 2023, after adjusting for inflation. Twenty-one states, D.C. and Puerto Rico showed no statistically significant differences.

The poverty rate decreased in 13 states and Puerto Rico between 2023 and 2024.

Conclusion

The rising costs of homeownership in the US have become a significant burden for many households. The combination of mortgage rate increases, higher insurance fees, and increased costs in general have led to a sharp rise in monthly costs for homeowners. As the housing market continues to evolve, it’s essential for individuals to understand the factors that affect the cost of homeownership and to plan accordingly.

Frequently Asked Questions

Q: What is the median monthly cost of homeownership in the US?

A: The median monthly cost of homeownership in the US increased to $2,035 in 2024, which is up from $1,960 in 2023.

Q: Which states have the highest monthly mortgage costs?

A: The states with the highest monthly mortgage costs are California, Hawaii, New Jersey, Massachusetts, and D.C.

Q: How has the housing market been affected by the pandemic?

A: The pandemic led to rock-bottom mortgage rates, which fueled bidding wars for homes and pushed up sale prices. U.S. home prices soared more than 50% between 2019 and 2024.

Q: What is the median gross rent in the US?

A: The median gross rent in the US increased 2.7% to $1,487 in 2024 from $1,448 in 2023, adjusted for inflation.

Q: How has the poverty rate changed in the US?

A: The poverty rate decreased in 13 states and Puerto Rico between 2023 and 2024.

The Source: Information for this article was taken from a FOX Business report and The Associated Press. This story was reported from San Jose. Real Estate News