Zillow’s latest research report adds a whole new plot twist to a market where buyers and homeowners alike have been reeling.

Turns out the monthly mortgage isn’t the only figure that’s been quietly creeping. The “hidden” costs of owning a home, which include insurance, taxes, and ongoing maintenance, now total a worrying $16,000 per year, Zillow notes.

Those figures have risen more quickly than incomes, hitting first-time buyers the hardest. It also paints a picture of a market that appears to be cooling on the surface but is actually becoming more expensive underneath.

That’s essentially the combination that explains why revenues are sluggish and affordability remains stuck in neutral. Throw in the growing share of underwater mortgages, and it’s clear the pressure is building on the housing market.

Zillow’s new analysis shows the hidden cost of owning a home has surged to nearly $16,000 a year nationwide.

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The $16,000 problem: Rising hidden costs hit homeowners hard

Those numbers change the math for anyone looking to purchase or stay in a home right now. Zillow’s economists argue that insurance costs alone are increasing almost twice as fast as homeowner incomes.

Put simply, these “extra” expenses are no longer just background noise. They’re front and center, compelling buyers to effectively rethink how much they can stretch their budgets while pushing current owners uncomfortably close to the edge.

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Additionally, the pain is even sharper in coastal markets, where hidden costs continue to top $20,000 a year. It’s a reminder that affordability isn’t improving but is actually getting squeezed from virtually every angle.

Here’s exactly where the hidden-cost shock is showing up:

  • Maintenance: About $10,946 a year, which covers virtually everything from routine repairs to aging HVAC systems that usually don’t break at convenient times.
  • Insurance: Up 48% since 2020, with places such as Miami averaging over $4,600 annually as the risks of testing weather conditions climb.
  • Property taxes: Roughly $3,030 a year nationally, but far greater in big coastal metros where values have risen considerably.
  • High-burden markets: NYC, San Francisco, Miami, and Boston are now seeing annual hidden expenses well over $20,000, creating a widening affordability gap.

A cooling housing market reveals new cracks

All of this effectively sets the stage for a housing market that may appear calmer on the surface than it actually feels behind the scenes.

Prices have stabilized at a national level, and sales remain sluggish, despite mortgage rates easing off their highs later in the year. 

Sellers with 3% pandemic mortgages are locked in, along with tighter inventory and stretched-out long listings before attracting a buyer. However, the more significant shift is in areas that got overheated during the boom years. That’s exactly where the cracks are beginning to show, and where underwater loans are making a comeback.

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Here’s where the cooling trend becomes unmistakable:

  • Biggest price drops: Austin, Cape Coral, and parts of Southwest Florida are witnessing double-digit drops from their peaks.
  • Growing underwater pockets:According to MarketWatch, approximately 900,000 homeowners are now underwater, with market concentration that experienced the quickest surge in 2020-2022.
  • Slow-motion sales: Homes are taking about five extra days to sell in comparison with last year, a sign that buyers are hesitant. 
  • More price cuts: Roughly one in five sellers have had to trim their list price by the fall, another sign of dropping demand.

The 50-year mortgage: lifeline or long-term trap?

The latest idea circulating in Washington highlights how deeply the affordability conversation has progressed. 

As reported by The Guardian, a 50-year mortgage may sound like the lifeline some buyers have been waiting for. It has a natural appeal, especially with monthly budgets already strained by high rates, heightened insurance premiums, and stagnant wages. 

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However, if we dig a little deeper, the risks accumulate quickly. A loan this long would leave homeowners paying interest for decades. 

If prices dip even modestly, a 50-year borrower may have spent years underwater simply because they’ve paid down so little principal. Critics call it a “fix” that merely treats the symptom, while avoiding the cause, and locking families into a lifetime of debt. 

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