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By Giulia Carbonaro
Senior Reporter
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A growing share of U.S. homeowners’ monthly payments is going toward property taxes and home insurance, according to a new study by Neighbors Bank, with residents of Florida and Illinois facing the highest burden.
An analysis of 450 U.S. metros conducted by the mortgage lender found that property taxes and home insurance are now comparable to around 21 percent of the cost of an average monthly mortgage payment nationwide.
In markets such as Pensacola, Florida, these expenses are so high that they rival mortgage payments.
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Why It Matters
The U.S. housing market is in the midst of a yearslong affordability crisis driven mainly by rising home prices and historically elevated borrowing costs. The average monthly mortgage payment in the country last year was $2,329, up from $1,924 in 2023, according to Rocket Mortgage.
But beside higher borrowing costs and still-growing home prices, other rising expenses have challenged both would-be homebuyers and homeowners across the nation: rising property taxes and home insurance.
The median property tax bill surged 30 percent between 2019 and 2024, Tax Policy Center senior research associate Thomas Brosy wrote in a September blog post. The cost of home insurance, amid a surge in devastating natural events, has grown even higher.
The average monthly home insurance cost soared from $39 per unit in 2019 to $68 per unit in 2024 in real terms, according to a note by the Federal Reserve, an increase of more than 75 percent.
Where Taxes and Insurance Take the Biggest Slice
Five of the 10 highest-cost metropolitan areas identified by Neighbors Bank are in Florida and Illinois, though homeowners in these two states face different challenges.
In Florida, rising homeowners insurance premiums in metros like Pensacola and Miami have brought up monthly payments for residents. In markets like Decatur, Peoria and Rockford in Illinois, it is higher property taxes that are driving up costs.
Pensacola homeowners were facing the highest burden in the country from a combination of property taxes and home insurance, which together make up 43.6 percent of their average monthly mortgage payment.
“It’s important to look beyond the sticker price and understand how taxes and insurance will shape your monthly payment, Jake Vehige, president of mortgage lending at Neighbors Bank, said in a statement included in the report.
“They’re recurring costs that need to be planned for from day one. Homebuyers who don’t account for them upfront can be caught off guard when their monthly payment is higher than expected or rises over time, and these costs can become burdensome for any homeowner as they increase.”
…and Where They Take the Smallest
Surprisingly, Neighbors Bank’s study found that in some of the highest-cost housing markets in the country, property taxes and home insurance made for a relatively small slice of homeowners’ monthly payments.
In Hawaii’s Honolulu, for example, property tax bills and insurance premiums account for just 9 percent of the average homeowner’s monthly payment, mainly thanks to the state’s low property tax rates and relatively stable home insurance sector.
Other metros with relatively low non-mortgage costs include St. George, Utah; Grand Junction, Colorado; Provo, Utah, and Flagstaff, Arizona. All these markets have relatively low property tax rates, newer housing stock and a relatively low climate-related insurance risk.
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