One thing I feel like does not get discussed enough in real estate conversations is how much insurance, taxes, and HOA fees can completely change the real monthly cost of a house.
A listing can look affordable on paper, but once you add in property taxes, insurance premiums, and sometimes HOA dues, the payment jumps way beyond what most buyers are actually comfortable with. In some cases, the house itself is not even the biggest problem anymore. The carrying costs are.
What makes it frustrating is that sellers and agents often focus on the sticker price, while buyers are looking at the full picture. A home that seems borderline at list price can become a hard no once the real monthly number comes into view.
I feel like this is one reason so many deals are getting stuck right now. Buyers are more cautious, and they are not just looking at what they can qualify for, but what they can actually live with every month.
Anyone else seeing this become a bigger issue lately?
Can we talk about how insurance and taxes are quietly wrecking affordability?
byu/Emotional_Newt_2227 inRealEstate
Posted by Emotional_Newt_2227
4 Comments
Idk for me all that stuff is kinda immaterial relative to how every house is nearly twice as expensive as it was pre COVID.
“Quietly” is the new em-dash.
Shoo, clanker! Go on, git!
You’re not wrong, but any serious buyer will very quickly understand these things.
Taxes are taxes, the higher they are the better your city will be (generally).
Insurance, legal racket, nothing you can do.
HOA, if you live in a place with high taxes, likely the local city wouldn’t need to rely on HOA, which are a nightmare. Condo HOA’s are separate beast, bad regulation and poor legislation mean that private companies run amok when managing condos.
This is all factored into your market’s prices.
People in your market can afford to pay a certain monthly payment for certain real estate.
If a 1600 sq ft house costs 4k/mo with property taxes and insurance, you can bet a 1600 sq ft condo with a $500 HOA would cost roughly $3500/no with property taxes and insurance, meaning that the condo would be priced lower than the sfh even though the monthly payments are the same.
I’ve seen this phenomenon across multiple markets. In pretty much every market I’ve seen, homes with high HOAs will be priced much lower than similar size and quality homes without HOAs.
The buyers in the market dictate the highest price properties can go for; and the thing that most determines how much a buyer can pay is the total monthly payment (especially when buying with a loan. Their lender will be very specific on how much the monthly payment can be relative to their income).