The Hidden Costs of Homeownership – A Growing Crisis
HOA Detective™ – Feb 25, 2025: The esteemed Ivy League institution of higher learning Harvard University, has chimed in on the growing crisis of homeownership in a Feb 24 2025 research brief published by the university’s Joint Center for Housing Studies (JCHS).
Readers of this blog should be aware by now where the HOA Detective™ stands on the topic of the U.S. housing crisis which has undermined the most basic, core values of American society. As this brief by JCHS researchers Daniel McCue, Whitney Airgood-Obrycki, and Peyton Whitney points out, homeownership has long been considered a pillar of financial stability, but a new report from the Center paints a stark picture of rising affordability challenges.
While much of the public conversation has focused on the struggles of first-time buyers navigating high interest rates and soaring home prices, this report highlights an often-overlooked group: longtime homeowners grappling with escalating costs that threaten their ability to remain in their homes.
The Rising Burden of Homeownership
According to JCHS, the number of cost-burdened homeowners—those spending more than 30% of their income on housing—rose to 20.3 million in 2023. That represents nearly 24% of all homeowner households, an increase of 3.6 million since 2019. Even more concerning, 9.4 million of these homeowners are now classified as severely cost-burdened, meaning they spend more than 50% of their income on housing expenses.
The problem is not limited to homeowners who recently entered the market at high mortgage rates. The largest growth in cost burdens has come from older homeowners who have been in their homes for years, but now face surging costs in property taxes, insurance, utilities, and maintenance. In fact, the number of cost-burdened homeowners aged 65 and older has risen by 1.7 million since 2019, accounting for nearly half of the total increase.
Low-Income Homeowners Hit the Hardest
Not surprisingly, the lowest-income homeowners are bearing the brunt of this crisis. A staggering 74.2% of homeowners earning less than $30,000 per year are cost-burdened, and more than half (55.0%) of them are severely burdened. This is an all-time high, surpassing even the peak levels seen during the mortgage crisis of 2010. Even homeowners without mortgages are struggling. Non-mortgage housing costs, such as property taxes, homeowners’ insurance, and utilities, have been rising at a pace far exceeding income growth.
The report points out that insurance premiums have increased by as much as 35% in some states, while property tax payments rose by 24% between 2019 and 2023. Even homeowners who have paid off their mortgages are not shielded from these cost increases.
Geography of Housing Affordability: The affordability crisis is most severe in high-cost metropolitan areas. Miami, for example, leads the country with 35% of homeowners being cost-burdened, followed closely by New York (32%), Los Angeles (32%), and San Diego (34%). In contrast, more affordable metro areas in the Midwest and South, such as Little Rock and Dayton, have burden rates below 18%.
If you are contemplating a move to lower cost city to afford a home, it is worth noting the JCHS found the housing affordability gap is closing even in the sleepy Midwest. Cities traditionally known for their lower cost of living, such as Milwaukee, Scranton, and Oklahoma City, saw their cost-burden rates rise more than twice as fast as the national average between 2019 and 2023. The JCHS report further notes numerous metro regions where the housing cost burden is well above the national median.
Why Housing Costs Continue to Soaring: JCHS identifies several key drivers behind the rising cost burdens:
- Property Taxes: Up 17% nationally, with low-income homeowners seeing a 24% increase.
- Homeowners Insurance: Premiums surged, with some states seeing 35% annual increases.
- Utility Costs: Water, electricity, and heating expenses climbed 19% for all homeowners and even higher for lower-income households.
- Maintenance and Repairs: The cost of home repairs has spiked 34% since 2019, forcing many low-income homeowners to defer maintenance, which may lead to larger, more expensive problems down the road.
A House-Rich, Cash-Poor Dilemma: Despite these financial pressures, homeowners have seen their home values rise dramatically, with the average homeowner gaining nearly $200,000 in home equity since 2019. However, this creates a dilemma for older and lower-income homeowners who are house-rich, but cash-poor. While their home is worth more on paper, they lack the disposable income to keep up with rising costs.
Unlocking this equity through selling, refinancing, or reverse mortgages remains a difficult choice. Selling may not be desirable for seniors looking to age in place while refinancing at today’s high interest rates could be cost-prohibitive. Reverse mortgages, though an option for some, come with complex terms and high fees that may not make financial sense.
Policy Implications and Possible Solutions: The JCHS report underscores the need for targeted policy interventions to help struggling homeowners. Some proposed solutions include:
- Property Tax Relief Programs: Many states offer exemptions or circuit-breaker programs to cap tax burdens for low-income or elderly homeowners.
- Expanded Home Repair Assistance: Federal and state programs, such as the Weatherization Assistance Program, can help homeowners make energy-efficient upgrades to reduce long-term costs.
- Affordable Home Insurance Initiatives: Some states provide FAIR (Fair Access to Insurance Requirements) plans for homeowners who cannot secure traditional policies, though these tend to be more expensive.
- Equity-Tapping Strategies: Innovative financial products, such as shared equity programs or state-backed reverse mortgage alternatives, could help homeowners access their wealth without facing foreclosure risks.
A Growing Crisis with No Easy Fix: In conclusion, the rising cost burden on U.S. homeowners represents a slow-moving crisis that demands urgent attention. While the public debate often centers on the challenges of first-time buyers, millions of existing homeowners—especially seniors and low-income households—are at risk of losing their homes due to financial strain.
For those living in HOAs, these affordability challenges are further compounded by rising assessments and special levies for deferred maintenance. As more communities reach the “HOA Tipping Point,” where aging infrastructure demands significant capital investment, the financial strain on homeowners is only expected to grow.
Addressing this issue will require a multi-pronged approach, balancing immediate relief for struggling homeowners with long-term solutions that enhance financial stability. Whether through tax relief, financial assistance programs, or innovative equity-sharing models, proactive intervention is essential to prevent a wave of homeowner displacement in the coming years.
The affordability crisis isn’t just a problem for individual homeowners—it’s a systemic issue that threatens community stability and the broader housing market. If policymakers, HOAs, and financial institutions fail to act, the dream of homeownership could become an enduring financial nightmare for millions of Americans.
Because You’re Buying More Than a Home!
