The hidden housing costs that push homeowners toward crime
In states where property taxes and homeowners insurance costs are rising the fastest, there is a spike in the number of people who are behind on their mortgages, according to a real estate analytics firm. Cotality.
And there could be an increase in security deposits one of the biggest risks homeowners will face in 2026warns Cotality.
That’s what the company says rising escrow costs are reshaping the financial reality of U.S. homeownership and undermining the predictability once promised by fixed mortgage payments.
“Increasing escrow payments can definitely deter potential homeowners from purchasing a home, especially in states where escrow payments make up a large percentage of the monthly cost of homeownership,” says Joel Bernersenior economist at Realtor.com®.
What is deposit?
After purchasing a home, your lender may open an escrow account to handle ongoing real estate expenses, such as property taxes, homeowners insurance and, if necessary, mortgage insurance.
Part of your monthly mortgage payments are reserved in this account. When tax or insurance bills are due, the lender will pay them on your behalf.
If there is an additional balance on the account, you may receive a refund and a lower monthly payment. If costs increase, your lender may increase your payment to make up the shortfall.
States where bail payments are rising the fastest
The 10 states where property taxes and homeowners insurance costs are rising the fastest are in the South and Midwest, Cotality found.
Between 2019 and 2025, Colorado and Florida both recorded increases in bail payments of 77% and 70%, respectively.
“Property taxes have really escalated in Florida due to a rapid increase in property values over the past few years. [COVID-19] pandemic boom in the real estate sector, while homes in many cases doubled or tripled in value,” Cara Ameera Florida real estate agent with Coldwell Banker, tells Realtor.com.
“Additionally, insurance rates have increased significantly due to natural disasters, which has also increased monthly costs for homeowners paying their taxes.”
Ameer says the Florida real estate market has been in a slump over the past two years due to high interest rates, rising insurance costs and higher HOA and condo fees.
“Things appear to be looking up for Florida real estate, however, as prices have adjusted and interest rates have dropped slightly,” she says. “But buyers are still absolutely considering insurance costs when buying a home in today’s climate. In Florida, you need homeowners insurance and flood insurance, so those are two types of expenses there.”
Cotality chief economist Archana Pradhan tells Realtor.com that Colorado is experiencing more intense wildfires and hail, driving up insurance costs and, by extension, escrow bills in the state.
“Insurers are pulling out of both Colorado and Florida, reducing competition,” Pradhan says.
“Our state has been through a perfect storm when it comes to taxes and insurance.” Andreas Fortuinreal estate agent and real estate agency Great Colorado Homestells Realtor.com.
“Many property tax breaks expired all at once in 2024, causing a huge jump in 2025 tax bills. Home prices also rose rapidly during the last lookback period. Insurance companies are raising rates because of huge hailstorms. They are also concerned about large wildfires near our mountain homes.”
Fortune explains that these combined costs forced banks to make monthly escrow payments.
“My property insurance increased by $400 this year. Many people were shocked by their new mortgage bills, and some people now owe their banks thousands of additional dollars,” says Fortune.
As for the current real estate market in Colorado, Fortune says it is “very stuck right now” and that “the frenzied bidding wars have largely disappeared.”
“Many sellers still want the high prices of three years ago, but buyers can’t afford those prices with these new high interest rates,” he says.
“We have more homes for sale than we had last summer, and more homes on the market than in the last twelve years. Most homes have now been on the market for more than two months, so you’ll see more sellers lowering their prices to find a buyer. It’s tough for people trying to sell older homes, and buyers are very picky about every little repair.”
The rest of the top 10 states with the largest increases were Wyoming (+66%); South Dakota (+65%); Montana (+64%); Louisiana (+63%); Alabama (+62%); Georgia (+58%); North Carolina (+56%) and Indiana (+56%).
States where escrow eats up the majority of your mortgage payment
Nationally, people pay an average of 45% more in escrow costs compared to five years ago.
The states where escrow payments make up the largest portion of the total monthly mortgage payment are Nebraska (45%), Texas (44%), and Illinois (44%).
“These states where escrow payments make up the largest portion of monthly homeownership costs are all states with high property taxes and relatively low home costs, so it’s not exactly surprising to see escrow payments make up such a large portion of monthly payments,” says Berner.
Nebraska is home to the second largest number of homes affected by hail, according to Cotality data.
“Rising home insurance costs and escalating property taxes are delivering a one-two punch to Nebraska homeowners,” the U.S. Representative said. Mike Flood because Nebraska said in a press release.
Texas exhibits a similar escrow burden, although the factors behind it differ.
“Texas has no state income tax, so our property taxes are higher than some other states,” says Noah Levybroker at The boutique real estate in Austin. “Most people see that as an advantage and end up coming to Texas specifically for that reason. It makes more sense to bring in more of their income here rather than pay lower property taxes elsewhere.”
Additionally, “parts of Texas often experience tornadoes and hail, and Texas is also affected by hurricanes and floods,” Pradhan added.
In addition to recurring severe storms and hail, Illinois homeowners are also dealing with skyrocketing property taxes, which have added to the stress of paying security deposits.
According to WalletHubIllinois ranked as the state with the second-highest property tax rate in the country, right behind New Jersey.
The average home tax in Chicago in 2024 alone shot up 16.7% to $4,457, the largest percentage of city growth in 30 years.
“Buyers should make sure they factor the additional costs of homeownership, such as insurance, taxes and HOA fees, into their budget when deciding whether to purchase,” Berner advises.
