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When newlyweds Darin and Emma Wood were looking to buy their first home near Salt Lake City this spring, their real estate agent told them to be prepared for additional costs if they became owners.
“He explained very clearly that taxes change,” said Darin, a 26-year-old engineer. And in an area where hail is a constant risk, the Woods knew just how important property insurance was.
Thanks to these conversations, “we feel prepared,” he told USA TODAY. “My wife and I would never have had the peace of mind to buy a home if we didn’t know what the worst-case scenario was.”
As taxes and insurance premiums soar, the possibility of a “worst-case scenario” is increasing. Even though the majority of Americans continue to choose fixed-rate mortgages, the costs associated with ownership have fluctuated and primarily increased.
These stresses are most evident in the escrow accounts that mortgage companies maintain to pay taxes and insurance on behalf of homeowners. An analysis of escrow accounts by real estate data provider Cotality for USA TODAY found that as many as 65% of all homeowners had an average escrow shortfall of $2,157.
Even if there is a shortage, that in itself is not a problem. A mortgage servicer sets up an escrow account based on an estimate of the amount it will pay on behalf of a borrower. Accounts are reviewed annually and the analysis is sent to the borrower. If there is a shortfall, it can usually be funded the following year.
Still, some observers see the scale of the problem as another manifestation of a broader affordability crisis. In an economy where many Americans live paycheck to paycheck, seeing your monthly mortgage payment increase, let alone increase by hundreds of dollars a month, could be a tipping point.
Recent cost increases
The latest increase in monthly costs comes after a period of instability in the housing market. Home prices have risen dramatically during a buying frenzy during the pandemic years when mortgage rates were at record lows and more Americans were working from home. As a result, property taxes jumped 15% between 2019 and 2024, Cotality data shows.
Meanwhile, a Dallas Fed report released in March found that property and casualty insurance costs rose 70% between 2019 and 2025 due to a surge in natural disasters and uncertainty about climate change.
If a borrower has private mortgage insurance, these costs can account for more than 40% of the total monthly home payment in some regions of the country, according to Kotality research.
Rising insurance premiums can cause financial hardship
While Darin and Emma Wood are hopeful they can manage the additional costs, many Americans aren’t so lucky.
Faced with rising insurance premiums, many households are being forced to move, according to a Dallas Fed report. “A $1,000 increase in premium rates corresponds to a 0.54 percentage point increase in the probability of relocation,” the researchers wrote.
But if the homeowner is unable to move or for other reasons is unable to lower their insurance premiums, things can get serious. “Increasing insurance premiums will lead to significant economic hardship,” the report states. “The annual increase in insurance premiums increases the likelihood of mortgage payments becoming delinquent and delinquent.We estimate that insurance premium increases caused approximately 31,000 mortgages to fall into delinquency in 2022.”
Caitlin Gravel is a housing counselor at Neighbors Helping Neighbors, a New York City-based nonprofit organization. Gravel said she has heard from people who have contacted her about their escrow accounts being low “all day long.”
She said most of the people who contact her can’t afford to pay more each month, especially since about 75% of her clients are elderly and on fixed incomes. In the past week alone, she has had to refer three people to the food pantry.
“They’re seeing rising costs, not only in taxes and insurance, but also in food, transportation and everything else they need to survive,” Gravel told USA TODAY. “Every area of our lives is increasing, right? And overall, it feels like our support networks are decreasing.”
How to deal with rising housing costs
There are several steps homeowners can take when faced with rising costs.
First and foremost, talk to your mortgage servicer, says Sharon Cornelissen, director of housing for the Consumer Federation of America, a national nonprofit organization. Be sure to understand what they are trying to tell you, and if you can’t afford something, talk to them about it.
“They want to keep you in your home, so they’ll be happy to work with you,” Cornelissen said.
Find out if you qualify for a property tax exemption. Although each jurisdiction is different, many jurisdictions have programs in place to reduce costs for property owners, elderly homeowners, and people with special needs or disabilities.
You can also purchase new insurance. Be sure to review your policy coverage and consider changing it if it makes sense.
If you need advice, ask for help. Housing counselors like Gravell are part of a national network certified by the Department of Housing and Urban Development. Although the White House has slashed HUD’s budget across the board, and specifically the housing counseling portion, some help may still be available. Gravel cautions when accepting unsolicited offers of assistance. There are many scammers who take advantage of distressed and confused homeowners.
There may be some solace in the fact that some housing experts, such as Kotality’s chief economist Thelma Hepp, think the recent surge in home prices may be coming to an end. After several years of stagnation in the housing market, home prices are actually declining slightly.
However, this is not the case everywhere. And many homeowners feel like they’re barely getting by.
“It’s a real challenge for the general public,” Gravel said. “I think there’s a lot of confusion about why everything costs so much. Why isn’t there more support? And why isn’t more effective support more organized?”
