Affordability is often associated primarily with home prices and mortgage interest rates. However, mortgage payments generally include not only principal and interest, but also property taxes and homeowner’s insurance. For loans exceeding 80% loan-to-value, private mortgage insurance is typically required as well.
While rising interest rates and home prices have had a significant effect on affordability, the escrowed components of mortgage payment are increasingly challenging for prospective homeowners. Even if borrowers opt to pay property taxes and homeowner’s insurance separately, lenders must still qualify them based on the total monthly obligation, which includes these costs. In many cases, high property tax payments substantially reduce a borrower’s purchasing power or result in disqualification for a loan.
In addition, current insurance-related challenges extend beyond high premiums; in certain regions, obtaining adequate homeowner’s insurance has become difficult. Over the past several years, home insurance premiums have risen considerably. In Oregon, for example, cumulative premium increases are estimated at 38% to 45% between 2022 and early 2026. While Oregon continues to be more affordable compared to many states, the market has transitioned from relative stability to consistent annual increases due to factors such as wildfire risk and escalating reconstruction expenses.
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