How Affordable Is That Home Really? What Buyers Should Know Before Making a Move
The True Cost of Buying a Home Is More Than the Mortgage
When buyers start searching for a home, the first number they often focus on is the purchase price or the estimated mortgage payment. But real affordability goes far beyond those numbers.
Housing experts often use the 30% affordability rule, which suggests households should spend no more than about 30% of their income on housing costs. When housing expenses exceed that level, households may become “cost-burdened,” meaning housing costs create financial strain.
However, today’s housing market has made affordability more complicated. Rising home prices, mortgage rates, property taxes, and insurance costs mean buyers need to look at the full financial picture before deciding what they can comfortably afford.
Why Many Buyers Experience “Payment Shock”
One common mistake buyers make is focusing only on their mortgage payment while overlooking other ongoing homeownership expenses.
Real estate professionals warn that costs such as maintenance, landscaping, and emergency repairs can add 10% to 20% more than buyers initially expect, sometimes equaling a quarter of an additional mortgage payment.
These additional costs can include:
Property taxes
Homeowners insurance
Utilities
Maintenance and repairs
HOA or condo fees
Lawn care, snow removal, or pest control
When buyers do not account for these costs early in the process, their monthly housing budget can quickly stretch beyond what they originally planned.
The Hidden Costs Many Buyers Overlook
Taxes and insurance are two of the most commonly underestimated costs. According to housing data cited in the report:
Property taxes rose about 12% nationally between 2012 and 2023
The average annual property tax bill is about $4,380, though it varies by location
Home insurance premiums have increased significantly, with the average annual cost now around $3,000
In fact, nearly 45% of buyers say they did not consider insurance costs before buying, and more than half later had to make financial sacrifices because premiums were higher than expected.
Why Affordability Is Different for Every Buyer
The 30% rule can be a helpful guideline, but affordability is not one-size-fits-all. Factors that affect what a buyer can comfortably afford include:
Income stability
Savings and emergency funds
Existing debt obligations
Family size and lifestyle expenses
For example, households with higher incomes may still be comfortable spending slightly above the 30% benchmark, while others may need to stay well below it to maintain financial stability.
Why Understanding Affordability Matters More Than Ever
Housing affordability has become one of the most important factors shaping today’s real estate market. Research shows that a growing number of households are spending more than 30% of their income on housing. In fact, about 50% of renters and roughly 24% of homeowners are now considered cost-burdened, meaning housing costs exceed the recommended affordability threshold. This makes it even more important for buyers to understand the true cost of homeownership before making a decision.
Curious What Home Is Within Your Reach?
A professional affordability review can help you understand:
What your realistic monthly housing budget looks like
How taxes, insurance, and utilities affect payments
What price range may fit comfortably within your income
Sometimes the results show buyers can afford more than expected. In other cases, it helps them avoid stretching their budget too far. Either way, having clear numbers makes the homebuying process much easier.
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Ranked among the top 1% of real estate teams in the Chicagoland market, Cory Tanzer and the Cory Tanzer Group are experts in helping buyers and sellers navigate today’s market across Downtown Chicago, the North Shore, and the Western Suburbs. Recognized for their neighborhood expertise in areas like University Village, University Commons, South Loop, and Pilsen, the team helps clients stay one step ahead by understanding where the Chicago market is moving next.
