The U.S. housing economy has also felt the pinch. Homeowners are no longer keen to relocate as property prices continue to soar, and they struggle to pay their bills. What’s causing this phenomenon?
Less Is More
In this case, less is more, as American homeowners struggle to keep up with the rising property market prices. Prices are rising due to various factors, even if the home is smaller.
It’s Not Just the Purchase Price
While purchasing a home can be expensive, additional costs like utility bills, taxes, and more are raking up homeowners’ credit.
Analyzing the Costs
According to statistics by Bankrate, utilities, property taxes, and insurance increased from $14, 428 in 2020 to a massive $18,118 increase now.
What’s Affecting These Cost Increases?
An analyst from Bankrate, Jeff Ostrowski, said that increases in construction costs, overall property value, and the impact of climate natural disasters have an effect.
Comparing the Costs is Scary
When calculating the costs, Ostrowski also said “these numbers show that the cost of owning a home is at the same level as buying a used car every year”. He also added that while owning a home is important for Americans building wealth, it isn’t cheap to do so.
Maintenance Matters
When buying a property, one critical point is considering the maintenance of the long hall. The upkeep of the home can add to a heavy price tag.
Survey Reveals Alot
A survey by Tractor Supply noted that 25% of homeowners are not sure they’ll be able to keep up with lawn maintenance. Property owners who have had their property for 10 years or more spend about $721 per month for lawn maintenance compared to those having owned their home for a year and spend an estimated $142 a month.
Homeowners Struggle
According to a Redfin press release, homeowners struggle to pay their mortgage, and some have resorted to selling valuables and getting a second job. Making ends meet has been difficult.
Property Prices Even Higher
Redfin also noted in its press release that a survey showed that property prices have increased by 5% compared to previous years.
Touching Retirement Funds
It’s not only baby boomers that had to dip into their pensions to keep up with home expenses, but 14% of millennials surveyed also admitted to using their retirement savings to maintain their home expenses.
The Burdon of Owning a Home
Chen Zhao, Redfin’s Economic Research Lead said, “housing has become so financially burdensome that some families can no longer afford other essentials like medical care and food and forced to make major sacrifices…”
7% Increase Discourages Potential Homebuyers
With the increase in property by 7% compared to before, potential buyers are not as keen to secure a property if they don’t have to. Instead, people opt to continue renting a property.
No New Sales
Even though sellers can get more for their home, on average $462,000, they are reluctant to sell. This is mainly because of the strain and financial pressure a new property will add.
Expert Realtor Advice
According to an interview with property expert and realtor Alonna Davis, homeowners should be mindful of whether they’re stepping into a buyers’ or sellers’ market. Each market is beneficial. Sellers can benefit from a sellers’ market with higher selling prices, and buyers can benefit from a buyers’ market when the prices are low.
Hidden Costs
There are hidden housing costs, and some states have worse than others. According to reports from Bankrate, people in Hawaii can pay $29,015 per year in additional costs, while folks in Indiana can pay $12,259.
No Drop in Housing Prices Anytime Soon
Nerdwallet’s mortgage representative, Holden Lewis, says that property selling prices will not drop soon. Even when buyers are ready to wait out the market until the prices fall, “home prices are unlikely to go down this summer,” he said.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.