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73 July 2025 J O U R N A L July 2025 » themortgagepoint.com down payment and settlement." As homeowners frequently note, homes have always been a bit of a "money trap." However, there's a good reason why that chasm appears to be deeper than before. A highly competi- tive housing market, rising interest rates, and inflation have all contributed to the recent increase in the cost of homeown- ership in the U.S. Home Costs Vary by State—By a Long Shot The price of purchasing a spot is where it all starts. Real estate website Red- fin reports that as of April 2025, the typical home price was a near-record $437,942, up 44% from 2020. The fact that mortgage rates have doubled in the last five years is another blow. In summary, homebuyers now have to take out larger loans, and borrowing is much more expensive. While it may come as no surprise to some, three Western states and two Eastern states are among the top five with the highest hidden expenses of homeownership. Top 10 Most Expensive States with the Highest Homeownership Costs 1. Hawaii ($34,573) 2. California ($32,262) 3. New Jersey ($29,751) 4. Massachusetts ($29,277) 5. Washington ($27,444) 6. Connecticut ($27,170) 7. New Hampshire ($25,870) 8. Colorado ($25,766) 9. Florida ($24,713) 10. Rhode Island ($23,885) Conversely, the list of states with the lowest hidden homeownership expenses includes two Midwesterners and three Southerners. Top 10 Most Expensive States with the Lowest Homeownership Costs 11. West Virginia ($12,579) 12. Mississippi ($14,810) 13. Indiana ($14,903) 14. Missouri ($15,349) 15. Arkansas ($15,362) 16. Iowa ($15,737) 17. Michigan ($16,045) 18. Ohio ($16,259) 19. Alabama ($16,635) 20. North Dakota ($16,389) The True Cost of Home Prices, Expenses & Maintenance To comfortably purchase a home in the modern day, Americans require a six-figure annual household income, specifically $116,986, according to Bankrate's 2025 Housing Affordability Study. Regretfully, the cost of residential real estate is rising faster than American salaries. According to a recent survey by the home improvement website Fixr, the median household income has only climbed 40% over the past 25 years, but property prices have increased by 197%. However, homebuying is only the first step: Once a person owns a property, the financial strain increases. Larger property taxes and homeowners' insurance policies (and premiums) are associated with higher home prices. Additionally, over the past five years, inflation has been showing up in the form of rising prices for labor, goods and services, and supplies for home remodeling and construction. According to the U.S. Bureau of Labor Statistics, the cumulative inflation rate from April 2020 to April 2025 was 25%, meaning that an item that cost $100 five years ago now costs $125. Because of this, consumers are espe- cially suffering from home maintenance costs, which account for the largest portion of the hidden costs at $8,808 an- nually. The cost of utilities and energy is nearly doubled ($4,494), property taxes are doubled ($4,316), home insurance is four times higher ($2,267), and internet and cable are six times pricier ($1,515). These costs have become one of the main causes of regret among home- buyers. Nearly half of homeowners (42%) who had at least one concern about purchasing their property said that maintenance and other unfore- seen expenses were more costly than anticipated, according to Bankrate's 2025 Homeowner Regrets Survey. Indeed, among those who had them, the most frequent regret was the unanticipated maintenance and the continuous finan- cial strain of minor repairs and upkeep. While Pricey, the American Dream is Still Alive for Many According to Bankrate's analysis, homeownership expenses vary greatly across the nation, with the costliest state, Hawaii, having costs that are almost three times higher than those of the least expensive state, West Virginia. The states on the East and West Coast often have the biggest hidden costs, which is not surprising. They are so costly in large part because of their high property taxes and high hous- ing values, which affect maintenance expenditures. It may be safe to say that the Amer- ican Dream has long been associated with homeownership and the stability it provides. According to Bankrate's 2025 Home Affordability Survey, roughly 82% of American adults believe that owning a home is still a part of the American Dream, more so than having a success- ful profession (66%) or being able to retire (71%), among other things. When asked which, if any, of the following they consider to be part of the American Dream, respondents said: • Owning a home (82%) • Being able to retire (71%) • Having a successful career (66%) • Owning a car, truck, or other vehicle (56%) • Having children (44%) • Getting a college degree (35%) • None of the above (7%) Note: Respondents are U.S. adults and could select more than one response. Additionally, some 84% of Gen Xers and 89% of baby boomers, respectively, think that owning a home is a component of the American Dream. Homeownership is also highly valued by millennials (74%) and Gen Zers (78%). According to both generations, it is more important than other indicators of financial success.