If it’s costing you more to live these days, it may not be just your grocery bills; there are additional expenses in almost all aspects of our lives. Basically, better get out your calculators and see where you can stem the tide before you start drowning.
One of the biggest increasing costs for homeowners is property insurance. Insurers have been raising rates to compensate them for losses from natural disasters for several years now, but after this year’s expenses are calculated, the increase in premiums could be staggering.
Keep in mind this has nothing to do with flood insurance, which is managed by the federal government, and have been kept artificially low. This may come to an end soon since the government is now looking at their losses in coastal areas and attempting to mitigate that loss.
Last year, FEMA changed the way it calculates flood insurance prices. Instead of relying on old flood zone maps covering broad areas, it’s now basing premium prices on a wider range of factors, like an individual property’s distance from the ocean, rainfall levels and the cost to rebuild a home. This system sure looks a lot like the model private insurers use to determine their premiums.
The second major factor facing homeowners is an increase in property taxes. In September, 32% of the average single-family mortgage payment went to property taxes and home insurance. This is the highest since 2014, and in many metro areas this number reaches 50%.
The triple threat of rising taxes, homeowners’ insurance and fluctuating mortgage interest rates is keeping homebuyers out of the market. This is keeping the number of sales down, but the prices are still high. With sellers’ fears escalating, there could easily be an adjustment in selling prices.
Many senior homeowners on fixed incomes are having difficulty keeping up with the increase in expenses and are facing the possibility of a relocation to a less expense lifestyle. In addition, young families who bought at the margin of what they could afford are also struggling with the additional homeowner expenses, school costs, gasoline and food.
In spite of all of the increase costs, homeowners still want to give their homes a facelift, either to prepare for sale or just for personal enjoyment. If you’re thinking of this there are a few upgrades you would want to skip: Kitchen remodeling with anything but the most neutral materials is not going to get you money back; home extensions like oversized primary suites may make purchasers swoon, but they won’t pay more for it; and expensive or custom exterior upgrades like roofs and trim should be replaced with the moderately priced choices that look new.
There are plenty of low-cost items that can be upgraded and will give you good value for your money: The big one is paint, it’s cheap and leaves a clean appearance; replace old carpets, wash windows, clean the bathrooms of anything that looks like mold and declutter.
We’re all in this together since housing is so much a part of our lives and economy. And as far as calculators are concerned, I suggest you get a nice big one with oversized numbers to go with your oversize expenses.
