Protecting the Dream of Homeownership During National Homeownership Month

Homeownership is a central part of the American dream, but for many Americans, achieving and maintaining this dream has become increasingly difficult. June is National Homeownership Month, and it’s the ideal time to consider what’s needed to become – and stay – a homeowner.

The Growing Challenges to Homeownership

The American Bankruptcy Institute says the U.S. homeownership rate has fallen to the lowest level since 1965. Based on U.S. Census Bureau data, the homeownership rate reached a low of 63%. Just a decade ago, homeownership rates were climbing, reaching a high of 69%, but this trend has reversed.

Affordability is a likely culprit. The U.S. Census Bureau reports the median monthly cost of owning a home with a mortgage increased from $1,902 in 2022 to $1,960 in 2023, and then it increased again to $2,035 in 2024. The figure includes mortgage payments as well as insurance, taxes, utilities and various fees.

The Ongoing Responsibilities of Homeowners

Buying a first home is a major milestone, but it’s only the beginning of a person’s homeownership journey. Homeownership comes with major responsibilities, and homeowners who are not able to meet these responsibilities may be forced to sell, or worse, be subject to foreclosure.

Common threats to homeownership include:

• Wear and Tear. From your roof to your dishwasher, every feature of your home has a limited lifespan. Proactive maintenance can help appliances and structures last as long as possible, but eventually, replacement is necessary.
• Both small-scale disasters, such as kitchen fires and burst pipes, and large-scale disasters, such as wildfires and major storms, can cause massive damage, making homes uninhabitable until expensive repairs can be completed.
• As the property owner, you are responsible for maintaining safe conditions on your land. If a guest trips on an icy porch or a child from the neighborhood sneaks into your pool, you could be financially liable for any injuries.
• Homeowners have to comply with city ordinances, which may require things like yard maintenance and repairs to damage sidewalks. If you need to rebuild after a disaster, you may be required to meet new building codes, which can increase the cost of construction. For homes in neighborhoods with homeowners associations, there may be additional rules and requirements.

Three Ways to Protect Your Investment

Once you achieve your goal of home ownership, it’s important to safeguard your investment. Below are three key considerations.

1. Review your insurance needs.

If a major loss occurs, the quality and scope of your insurance can significantly impact your financial recovery. As you review your coverage, ask yourself:

• Are your limits high enough? If you haven’t increased your coverage limits recently, you might be overdue. Housing prices and construction costs have risen, and many homes are underinsured as a result.
• Do you need coverage add-ons? A standard homeowners insurance policy covers a lot, but it can still leave coverage gaps. Add-ons to consider include sewer backup coverage in case you have a sump pump failure or sewage backs up into your home; ordinance or law coverage in case your home needs expensive upgrades to be brought up to code; and floaters to provide additional coverage for high-value personal items.
• Do you need additional standalone coverage? Some perils cannot be covered under homeowners insurance, even with add-ons. If you want coverage, you need to purchase a separate, standalone policy. Flood insurance and earthquake insurance are two common examples. You may also want an umbrella insurance policy to provide additional liability protection.

2. Plan for maintenance needs.

Homeowners insurance does not cover wear and tear damage. As a homeowner, you must perform regular maintenance and replace items when they reach the end of their lifespan.

• Conduct regular maintenance. Proactive maintenance can prevent worse damage, ultimately keeping maintenance costs down and preserving property value over time. For example, aim to have the gutters cleaned twice a year and the HVAC system serviced once a year. Also make sure you’re testing safety devices like smoke alarms, and keep an eye out for signs of pests, cracks in your foundation, or other problems that need to be addressed before they get worse.
• Budget for repairs and replacements. Keep track of when items will need to be replaced and budget accordingly. For example, if your roof has a 30-year lifespan and it was installed 20 years ago, you should plan on a replacement in the next decade.

3. Harden your home against hazards.

Have you ever wondered why some houses are spared when a wildfire tears through a neighborhood? In some cases, there may be some luck involved, but structural and landscaping designs can also make a difference.

Things you can do include:

• Create a defensible space around your home. There will be less fuel available for flames to spread.
• Consider upgrades. For example, installing ember-resistant vents can decrease the risk of fire.

At Heffernan Insurance Brokers, we help homeowners protect one of their most important financial investments: their home. Contact us for a comprehensive review of your coverage and personalized recommendations.