Despite the rising costs of nearly everything following the COVID-19 pandemic, homeownership remains a dream for most adults. However, that dream comes at a price many buyers forget to consider. A new Real Estate Witch survey finds that 56% of those who purchased a home after 2020 have felt buyer’s remorse.
While most buyers focus on the monthly mortgage payments, they often forget the other regular expenses of owning and maintaining a home.
These additional costs can add tens of thousands of dollars to an annual home budget.
Those who purchased homes in 2020 or later especially feel the pinch as inflation and mortgage rates tick progressively higher. Nearly a third of these buyers say their home purchase has negatively affected their finances.
SURPRISING COSTS OF HOMEOWNERSHIP
Homebuyers must look beyond the monthly mortgage payment when preparing their budgets to keep their expectations in check.
“A lot of homeowners are caught off guard by the ongoing costs of owning a home, like maintenance, repairs, rising property taxes, and seasonal utility bills,” said Sergio Aguinaga, founder of Michigan Houses for Cash.
On average, Real Estate Witch found that homeowners pay more than $24,000 a year in addition to their mortgages — an extra $2,000 monthly. Homeowners’ association fees can add about $3,000 more annually.
Utilities tend to be the greatest expense. Sewer, water, gas, internet and cable, electricity, and phone bills
add about $610 a month or $7,320 a year. Maintenance costs average just over $500 monthly ($6,000 annually), and renovations are approximately $480 monthly ($5,760 annually).
Property taxes vary by state, but the average annual amount paid is about $3,000. Homeowners’ insurance, which also depends on where you live and the size of your home, averages $2,300 yearly.
WHAT HAS CHANGED SINCE 2020?
Today’s homebuyers face a very different market than those who bought before the pandemic. Before 2020, median home prices peaked at $337,900 in 2017. They began rising in the third quarter of 2020, topping $442,600 by the end of 2022. As of December 2024, the median home price was $427,179. Despite the dip, it is still 35% higher than 2020’s most affordable average home price of $317,100.
One positive change is that buyers now have more control over the amount they pay in real estate agent commission fees. A recent settlement with the National Association of Realtors means sellers are no longer obligated to cover buyer agent fees. Rather than paying the standard 2.58%, buyers can negotiate lower fees directly with their agents. Even dropping the cost to 1.5% could save buyers about $4,000 on a $400,000 home.
High mortgage rates are another challenge. Although rates dropped well below 3.0% in 2020, they rose steadily throughout 2022. For the last few months, they have hovered between 6% and 7%, meaning buyers will pay more for a more expensive home.
Say you purchased a $400,000 home in early November 2018, when rates peaked at 4.94%. With a 20% downpayment, your monthly mortgage payment would be $1,964. Today, the mortgage on that same home would be $2,379 a month, with a rate of 6.96%.
Homeowners’ insurance has also increased sharply over the years. In 2019, the annual rate was $1,272 or $106 a month. The national average for 2025 is $2,181 annually or about $182 monthly — a 71.6% increase.
“The trend denotes an increased economic burden faced by homebuyers,” said Alexei Morgado, a Florida real estate agent and the founder of Lexawise. “It may also be caused by increased cases of natural catastrophes that have caused insurance companies to raise their charges.”
Severe weather is only one reason for the increase. According to Redfin, more people moved into disaster-prone areas during the COVID-19 pandemic than out, leading to more claims during floods, storms, and wildfires. In addition, a 28% rise in construction costs since 2020 has made repairs more expensive.
WHAT TODAY’S BUYERS CAN EXPECT
The Real Estate Witch survey also found that about a third of post-2020 buyers felt they overpaid for their homes, while only 10% of those who bought before 2020 said the same. Experts say this is a lesson for today’s buyers to do their research and factor in additional homeownership costs before purchasing.
“The routine maintenance alone, including HVAC servicing, roof inspections, and lawn care, tends to add up quickly,” Morgado said.
“Unexpected repairs, like replacing a leaky roof or a broken water heater, may strain the budget.”
Monthly mortgage payments are easy to budget for because they are locked in. However, owners should expect property taxes and homeowners’ insurance to increase annually and plan accordingly.
Rising home prices tend to drive up property taxes, even when rates stay steady. Improvements that add value to your property can also increase your taxes, as can changes in government policies. Nationally, annual property taxes have risen 27.4% since 2019, from about $2,400 to just over $3,000. While the actual amount varies by state, property taxes rose 5.1% in 2024 and 4.1% in 2023.
Homeowners insurance typically increases about 5% each year, although premiums jumped 6.9% in the first half of 2024 and 12% in 2023. Some insurers predict rate increases of 10%–15% or more in 2025 as the risk of natural disasters continues to rise.
Your home’s location, age, and square footage will determine how much you pay. Nebraska, Florida, and Oklahoma tend to see the most expensive rates, while Vermont, Alaska, and Delaware typically have the lowest rates.
EXPERT ADVICE TO KEEP COSTS DOWN
A budget that accounts for the actual cost of ownership — not just the mortgage payment — is critical. If possible, set aside an extra $150 to $200 to account for a 5% increase in property taxes.
Also, try to improve your credit score before you purchase a home. Those with poor credit pay 77% more for home insurance than those with excellent credit.
Get a home inspection to reduce the amount of unexpected maintenance on your property. Adam Hamilton, CEO of REI Hub, said this is one step in the buying process homeowners skipped post-2020 as the market grew competitive.
“Not only were prices higher than ever, but the supply and demand ratio was as stark as ever, so prospective buyers kept finding themselves in competition with one another — even for homes that weren’t all that great,” he said. “Forgoing a home inspection may help you beat the competition, but it may also mean that you end up encountering a lot more maintenance and repairs that you then become financially responsible for.”
House hacking is another creative option for potential buyers. Instead of purchasing a single-family home, they can look for a duplex, triplex, or quadplex, then live in one unit while renting out the others. This way, they can enjoy the benefits of homeownership while subsidizing their mortgage payments and other expenses through tenants’ rent.
“With an FHA loan, a home buyer could get in for as little as 3.5% down, meaning they don’t have to save up much for the down payment,” said Holden Andrews, founder of Helpful Home Group. “You can instead use that money toward renovating the units like updating carpet, paint, or things like that to maximize rents and cash flow.”
Finally, ask your real estate agent if they offer home buyer rebates. They are available in 42 states and could save hundreds or even thousands of dollars. Some programs give refunds as a closing cost credit, while others will cut you a check. You can then put this money toward those additional homeownership costs.
DECLUTTERING CAN BE STRESSFUL
A clinical psychologist explains how personal values can make it easier
BY MARY E. DOZIER, MISSISSIPPI STATE UNIVERSITY THE CONVERSATION
I recently helped my mom sort through boxes she inherited when my grandparents passed away. One box was labeled — either ironically or genuinely — “toothpick holders and other treasures.” Inside were many keepsakes from moments now lost to history — although we found no toothpick holders.
My favorite of the items we sorted through was a solitary puzzle piece, an artifact reflecting my late grandmother’s penchant for hiding the final piece to a jigsaw puzzle just to swoop in at the last moment and finish it. After several hours of reminiscing, my mom and I threw away 90% of what we had sorted.
“Why did I keep this?” is a question I hear frequently, both from my family and friends and from patients. I am a licensed clinical psychologist whose research focuses on the characterization, assessment and treatment of hoarding disorder, particularly for adults 60 years of age or older. As such, I spend a great deal of my time thinking about this question.
WHAT DRIVES THE NEED TO KEEP STUFF?
Hoarding disorder is a psychiatric condition defined by urges to save items and difficulty discarding current possessions. For adults with “clinically severe” hoarding disorder, this leads to a level of household clutter that impairs daily functioning and can even create a fire hazard. In my professional experience, however, many adults struggle with clutter even if they do not meet the clinical criteria for hoarding disorder.
Holding on to things that have sentimental value or could be useful in the future is a natural part of growing older. For some people, though, this tendency to hold on to objects grows over time, to the point that they eventually do meet criteria for hoarding disorder.
Age-related changes in executive function may help explain the increase in prevalence of hoarding disorder as we get older; increasing difficulty with decision-making in general also affects decisions around household clutter.
The traditional model behind hoarding disorder suggests that difficulty with discarding comes from distress during decision-making.
However, my research shows that this may be less true of older adults.
When I was a graduate student, I conducted a study in which we asked adults with hoarding disorder to spend 15 minutes making decisions about whether to keep or discard various items brought from their home. Participants could sort whatever items they wanted. Most chose to sort paper items such as old mail, cards or notes.
We found that age was associated with lower levels of distress during the task, such that participants who were older tended to feel less stressed when making the decision about what to keep and what to discard. We also found that many participants, particularly those who were older, actually reported positive emotions while sorting their items.
In new research publishing soon, my current team replicated this finding using a home-based version of the task. This suggests that fear of making the wrong decision isn’t a universal driver of our urge to save items.
In fact, a study my team published in August 2024 with adults over 50 with hoarding disorder suggests that altruism, a personality trait of wanting to help others, may explain why some people keep items that others might discard. My colleagues and I compared our participants’ personality profiles with that of adults in the general population of the same gender and age group. Compared with the general population, participants with hoarding disorder scored almost universally high on altruism. Altruism also comes up frequently in my clinical work with older adults who struggle with clutter. People in our studies often tell me that they have held onto something out of a sense of responsibility, either for the item itself or to the environment.
“I need it to go to a good home” and “my grandmother gave this to me” are sentiments we commonly hear. Thus, people may keep things not out of fear of losing them but because saving them is consistent with their values.
LEANING INTO VALUES
In a 2024 study, my team demonstrated that taking a valuesbased approach to decluttering helps older adults to decrease household clutter and increases their positive affect, a state of mind characterized by feelings such as joy and contentment. Clinicians visited the homes of older adults with hoarding disorder for one hour per week for six weeks. At each visit, the clinicians used a technique called motivational interviewing to help participants talk through their decisions while they sorted household clutter.
We found that having participants start with identifying their values allowed them to maintain focus on their long-term goals. Too often, people focus on the immediate ability of an object to “spark joy” and forget to consider whether an object has greater meaning and purpose. Values are the abstract beliefs that we humans use to create our goals. Values are whatever drives us and can include family, faith or frivolity. Because values are subjective, what people identify as important to keep is also subjective. For example, the dress I wore to my sister’s wedding reminded me of a wonderful day. However, when it no longer fit, I gave it away because doing so was more consistent with my values of utility and helpfulness: I wanted the dress to go to someone who needed it and would use it. Someone who more strongly valued family and beauty might have prioritized keeping the dress because of the aesthetics and its link to a family event.
Additionally, we found that instead of challenging the reasons a person might have for keeping an item, it is helpful to instead focus on eliciting their reasons for discarding it and the goals they have for their home and their life.
TIPS FOR SWEEPING AWAY THE OLD
My research on using motivational interviewing for decluttering and my observations from a current clinical trial on the approach point to some practical steps people can take to declutter their home. Although my work has been primarily with older adults, these tips should be helpful for people of all ages.
Start with writing out your values. Every object in your home should feel value-consistent for you. For example, if tradition and faith are important values for you, you might be more inclined to hold onto a cookbook that was made by the elders at your church and more able to let go of a cookbook you picked up on a whim at a bookstore.
If, instead, health and creativity are your core values, it might be more important to hold onto a cookbook of novel ways to sneak more vegetables into your diet.
Defining value-consistent goals for using your space can help to maintain motivation as you declutter. Are you clearing off your desk so you can work more efficiently? Making space on kitchen counters to bake cookies with your grandchildren?
Remember that sometimes your values will conflict. At those moments, it may help to reflect on whether keeping or discarding an object will bring you closer to your goals for the space.
Similarly, remember that values are subjective. If you are helping a loved one declutter, maintain a curious, nonjudgmental attitude. Where you might see a box filled with junk, your grandmother might see something filled with “toothpick holders and other treasures.”
For additional resources and information on hoarding disorder, visit the International OCD Foundation website.
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