In this episode of The REconomy Podcast™, Chief Economist Mark Fleming and Deputy Chief Economist Odeta Kushi wrap up The REconomy Summer School series by diving into the findings of a recently published multi-part research series on the rising costs of living with special guest and research author, Senior Economist Sam Williamson. A variety of economic, environmental, and regional factors have pushed the number of cost-burdened households to a new peak in 2023. Their conversation breaks down how rising costs have impacted different age groups, why certain markets have suffered more than others, and what’s next in Sam’s cost of living series.

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Listen to the REconomy Podcast™ Episode 122:

“Younger buyers and retirees are feeling the most pressure—nearly nine in 10 newly cost-burdened homeowners since 2019 fall into these age groups.”
— Sam Williamson, Senior Economist at First American

Transcript:

Odeta Kushi - Hello and welcome to episode 122 of the REconomy Podcast, our fifth and final episode of this year's Summer School Series, where we discuss economic issues that impact real estate, housing, and affordability. I’m Odeta Kushi, deputy chief economist at First American, and here with me is Mark Fleming, chief economist at First American. We also have a special guest joining us for this final Summer School session—Sam Williamson, senior economist at First American. Hey, Mark, and welcome, Sam. You picked a good day to join us—our last day of school.

Mark Fleming - Hi, Odeta, and welcome, Sam. Happy last day of school.

Sam Williamson - Hi, Odeta. Hey, Mark. Yep, last day of Summer School—totally intentional. I strategically avoided all the homework and showed up just in time for graduation.

Mark Fleming - You…

Odeta Kushi - Yeah, you’re not getting off that easy. You’re actually here to teach us something about the cost of living in today’s housing market.

Mark Fleming - Nice—not so subtle, maybe, plug?

Odeta Kushi - Yeah, maybe I’m not great at subtle plugs. What Mark means is that Sam actually has a Cost of Living series on our Economic Center at firstam.com/economics. That’s a real plug—complete with charts, analysis, and interactive dashboards where you can check out any market you’re interested in. In today’s Summer School session, we’re going to walk through each of these analyses and what’s to come for the series. We’ll also link to them in the episode description so they’re easy to find.

Sam Williamson - Appreciate the plug. As Odeta mentioned, make sure to smash that subscribe button to the blog—if people still say that anymore. Probably not.

Odeta Kushi - “Smash that subscribe button” might be a little outdated, but point taken. All right, where should we begin?

Mark Fleming - I think we have to start with the first post in the series, which is all about non-mortgage-related housing costs. We know interest rates are elevated and house prices keep hitting new highs, even if the growth rate has slowed. But there are other factors that determine the cost of living.

Odeta Kushi - For example—homeowners’ insurance. A topic we barely discussed years ago but can’t seem to stop talking about these days.

Sam Williamson - And for good reason. According to our analysis of the Current Population Survey’s Annual Social and Economic Supplement—quite a mouthful—U.S. homeowners’ insurance premiums have jumped 21% between 2021 and 2023. That’s roughly $300 more per policy each year, outpacing both income growth and inflation over that time.

Mark Fleming - Yeah.

Odeta Kushi - Yeah.

Mark Fleming - That’s a pretty big jump. And it impacts both prospective buyers, who are already grappling with elevated interest rates and home prices, and existing homeowners.

Odeta Kushi - Especially those on fixed incomes, such as retirees. Sam, I assume, as with all things in real estate, this growth varies depending on where you live.

Sam Williamson - That’s right. The sharpest increases have been in the South, where annual premiums rose by an average of 25% between 2021 and 2023—about $425 more per policy per year. Coastal cities, especially those prone to severe tropical storms and hurricanes, have been hit the hardest. In some cases, like New Orleans, premiums have skyrocketed 51%.

Mark Fleming - New Orleans—that’s a lot. It does have a higher risk profile, so that helps explain the big jump.

Odeta Kushi - True, but my understanding is that the rise in insurance premiums comes from both increased natural hazard risk and higher costs, among other factors. If I had to list the main drivers, I’d say: increased frequency and severity of large-scale natural disasters; higher construction and replacement costs; population growth in high-risk areas; rising reinsurance costs and availability challenges; and state-level regulatory issues.

Sam Williamson - That’s a great summary, Odeta. I can tell you’ve done your homework—you get an A+. Let’s dig into that first point. We’ve seen more extreme weather and climate disasters, both in frequency and severity. According to NOAA, from 1980 to 2019, the U.S. averaged about seven billion-dollar disaster events per year. In the past five years, that’s jumped to 23 per year. And 2023 and 2024 were especially intense, with 28 and 27 events respectively—the highest on record. At the same time, the annualized cost of these disasters has grown from roughly $55 billion to $151 billion.

Mark Fleming - Quick math for our listeners—that’s a 175% increase. Ouch. And on the reinsurance point: reinsurance is coverage that insurance companies buy to protect themselves. Those costs have gone up and are being passed on to policyholders, especially in disaster-prone areas.

Odeta Kushi - Remember, insurance premiums for property coverage are typically based on a replacement cost basis—the cost to rebuild or repair the home with similar materials and workmanship at today’s prices. Unfortunately, inflation has driven construction material costs up by 35% from 2020 to 2023, with prices climbing another six percentage points through June of this year, according to the latest Producer Price Index report.
Meanwhile, persistent labor shortages have driven construction wages up nearly 27% from January 2020 through June 2025. Insurers are expected to continue raising premiums to offset these economic and inflationary pressures—though, again, it varies by geography.

Mark Fleming - That’s right. As we mentioned earlier, areas in the South prone to severe weather have seen the steepest increases in home insurance premiums. Among the nation’s 50 largest metro areas, eight of the ten recording the most dramatic premium hikes are in the South.

Sam Williamson - Coastal cities, where the threat of tropical storms and hurricanes loom large, have experienced the sharpest hikes. As I mentioned earlier, New Orleans tops the list with a 51% increase in premiums from 2021 to 2023—an extra $1,200—bringing the average annual premium to more than $3,500. Other coastal cities like Jacksonville, Tampa, and Orlando have also seen increases of 38%, 33%, and 31%, respectively. But it’s not just the coast. Inland metros are feeling the effects of severe weather events, like tornadoes, hail, and high winds. Premiums have climbed in places such as Birmingham, Alabama; Richmond, Virginia; Atlanta; and Houston over the same period.

Odeta Kushi - And outside of the South, Denver stands out as the one metro where premium increases rival those in the hardest-hit southern markets. Premiums in Denver rose 25% from 2021 to 2023, driven by increased wildfire and hail damage.

Mark Fleming - You know, Denver wouldn’t have been my first thought when talking about high-risk markets.

Odeta Kushi - Same here, but I think the big takeaway from this analysis is that the surging cost of homeowners’ insurance is becoming a challenge to affordability nationwide—even in places you wouldn’t expect—for both prospective and existing homeowners.

Mark Fleming - Right.

Sam Williamson - Exactly. And even for existing homeowners, the impact varies depending on whether they have a mortgage or own their home outright. That’s the focus of the second post in our Cost of Living series. We found that the average monthly cost of owning a home in the U.S.—including mortgage payments, property taxes, insurance, and utilities—surpassed $1,700 in 2023. That’s a 17% increase from 2020, or about $250 more per month.
Mortgage holders have seen the steepest increases, but even those who've paid off their loans are feeling the pinch from rising taxes, insurance premiums, and utility bills.

Odeta Kushi - Let’s put some numbers to that. From 2020 to 2023, mortgage holders saw their average monthly expenses rise by 16%, while monthly costs for outright owners jumped by 29%.

Mark Fleming - Mortgage holders, who tend to be younger and in their prime earning years, have done a better job offsetting rising costs with higher incomes. For this group, the median share of household income spent on homeownership hit a low of 19.8% in 2020, before edging up by 0.5 percentage points to 20.3% in 2023. Outright owners, by contrast, are often older and more reliant on fixed incomes. While their monthly costs remain lower in absolute terms, they’ve risen more sharply relative to income, pushing their housing burden up by just over one percentage point to 10.5%.

Sam Williamson - Getting down to the significant digit, Mark—I can tell you’ve been studying. But it’s important to put these numbers in historical context. Mortgage holders have faced similar burden rates as recently as 2018, and outright owners saw comparable levels back in 2015. So while homeownership costs are rising, they’re not yet in unfamiliar territory.

Mark Fleming - Exactly.

Odeta Kushi - So, not without precedent, but the pace and scope of recent increases suggest the American dream of homeownership is becoming harder to attain and sustain. Thank you, thank you—another A+. I’m just racking them up. That’s actually a nice transition into the final part of the series we’re discussing today, which is all about cost burden.

Mark Fleming - Ooh, I like that term. Yes. We define “cost burden” as spending more than 30% of your income on housing. The number of cost-burdened households increased by 3 million between 2019 and 2023. The share of homeowners with cost burdens also rose to just over 22%, a 2.3 percentage point increase over four years.

Odeta Kushi - And it’s not just that more homeowners are struggling with housing costs—the severity of that struggle is growing. Nearly six out of every 10 newly cost-burdened homeowners since 2019 are severely burdened, spending more than half of their income on housing. In 2023, 7.3 million homeowners fell into this category—a 33% increase since 2019 and the highest level since 2011. The overall share of severely cost-burdened households now makes up nearly one in 10 homeowners, reflecting the intensifying affordability challenges.

Sam Williamson - We also looked at cost burdens by age and found that the pressure is falling most heavily on those just starting out and those hoping to stay put later in life—specifically, younger adults under 35 and seniors 65 and older.

Mark Fleming - Between 2019 and 2023, the number of cost-burdened homeowners under 35 jumped by 40%. Welcome to homeownership—less “Heaven is a Place on Earth” and more “Owner of a Lonely Wallet.”

Odeta Kushi - Okay, yes—nice Belinda Carlisle ’80s reference. Way to go.

Mark Fleming -That was actually a two-for-one ’80s reference, Sam—bonus points.

Sam Williamson - I caught it.

Mark Fleming - Exactly. Very nice.

Odeta Kushi - Good.

Sam Williamson - A riff on “Owner of a Lonely Heart” by Yes—my second favorite band..

Mark Fleming - He’s signed up, he can sing it better than me, and he worked in a music reference. Nicely done

Sam Williamson - A plus.

Odeta Kushi - I think you both should stick to your day jobs, but okay. And I’m pretty sure you’ve both told me you own that record on vinyl. Moving on—let’s get back to the numbers. For younger homeowners, in addition to rising housing costs, many carry higher levels of non-mortgage debt, like student loans and credit cards, compared to previous generations. That makes it harder to absorb unexpected expenses or build wealth.

Mark Fleming - True.

Sam Williamson - And, for many seniors, even though their mortgages are paid off, rising taxes, insurance premiums, and utility bills are straining fixed retirement incomes. Between 2019 and 2023, the number of cost-burdened homeowners aged 65 and older rose to 6.5 million—the highest level in over a decade. Today, more than one in four older homeowners spend over 30% of their income on housing.

Mark Fleming - The growing financial strain on younger and older homeowners highlights challenges at both ends of the homeownership journey. But we’re hopeful that rising household incomes can help ease the burden. And don’t forget—many existing homeowners can tap into significant home equity built up since the start of the pandemic. Are we at the end of the series? Is Summer School officially over?

Odeta Kushi - We are—but before we wrap up, Sam, do you want to preview the next blog post in the series?

Sam Williamson - Absolutely. For a little extra credit, our next post will take a closer look at how housing affordability varies across regions and what that means for homeowners navigating very different local markets.

Odeta Kushi - Ooh, stay tuned for that—and don’t forget to check out the interactive visuals. There’s so much more data to explore. That officially marks the end of Summer School 2025. You all—just like me—get an A+.

Mark Fleming - Whoa, grade inflation! Either we were that good, or you’re grading on a curve.

Odeta Kushi - Wouldn’t you like to know? Sam, thanks again for joining us today. And thank you all for listening to this REconomy Summer School session. If you have an economics question you’d like us to feature in the future, you can email us at economics@firstam.com. And as always, if you can’t wait for the next episode, you can follow us on X. I’m @OdetaKushi, he’s @FlemingEcon, and Sam is @SWilliamsonEcon. Until next time.

Thank you for listening, and we hope you enjoyed this episode of The REconomy Podcast™ from First American. We're pleased to offer you even more economic content at firstam.com/economics. This episode is copyright 2025 by First American Financial Corporation. All rights reserved