For some, the American dream is coming up with the money to buy their own home and rely on paying a fixed monthly mortgage on it.
But for many, that hard-won stability is now being threatened by unpredictable increases in property taxes and insurance payments that put pressure on their finances and force some into delinquency, according to a new report from Cotality, a real estate data analysis company.
“When property taxes and insurance can jump by double digits each year, that stability disappears. If monthly payments can no longer be counted on, then homeownership loses the very feature that once made it a safe bet. It stops being a way to build wealth and starts becoming a risk,” Cotality stated.
It noted that for more than three years, there was a decline in serious mortgage delinquencies – meaning payments more than 90 days past due. But that began to change in mid-2024. More than half the states experienced just a slight increase in delinquencies. But Florida, South Carolina and Georgia saw significant increases as the cost of insurance climbed in the wake of major natural disasters.
In many states, the cost of escrow payments, which typically cover the cost of taxes and insurance, soared from 2019 to 2024. In Florida and Colorado, they shot up 62%, in South Carolina 37%, in Georgia and Oklahoma 38%, 49% in North Carolina and Indiana, in Nebraska 43%, in Louisiana 52% and in Texas 21%.
Delinquencies increased in line with the higher escrow payments. They reached 1.87% of all loans in Louisiana, 1.43% in Florida, 1.24% in Oklahoma and also climbed in South Carolina (1.05%) and Georgia (1.12%), as well as the other states where escrow rose. Mississippi has the highest overall delinquency rate, along with the lowest median household income and high risk of damage from hurricanes.
In Florida property taxes jumped nearly 50% over five years and insurance costs also spiked, propelling higher escrow costs. “That’s on top of a mortgage. And that’s money many households simply don’t have,” the report noted. It added that in South Carolina 14 insurers ran out of funds between 2020 and 2023, which raised premiums, while in Georgia an average $700 increase in property taxes over five years added new pressure for homeowners.
The pressure can be especially acute for borrowers of FHA or VA loans that are intended to help low-income families get a foot on the property ladder.”
“They come with lower down payments and more forgiving credit rules, but they also come with tighter margins. There’s less room for unexpected costs,” the report stated. “When escrow payments rise, these borrowers feel it most. Cotality’s data shows that serious delinquency rates for FHA loans are five times higher than for conventional mortgages. VA loans are not far behind with three and a half times more serious delinquencies than conventional alternatives.
“A house is only a safe investment if you can afford to keep living in it.”
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