Buying a home is a high-stakes game, often with hundreds of thousands of dollars on the line. Making a wrong decision can lead to foreclosure and bankruptcy; making the right decision can generate wealth that is passed down for generations.

When people are ready to settle down, they're confronted with all the usual dilemmas: whether to buy a home; where to buy a home; what kind of home to buy; and how much to spend. These highly emotional decisions are all more manageable using the lessons of behavioral economics, which I studied as an economist.

When I took a new tech job offer in 2017, it meant leaving San Diego for Seattle. As I set out to find a new home for myself, my husband, and my mom in my new city, I wanted to avoid getting caught up in the competitive pressure of beating out other buyers and making rash decisions that I might later regret. So I decided to divide my search into two phases. In the first, I would take my time getting to know the city and its various neighborhoods by renting a home. In the second, once I had a clear sense of my preferences, I would begin making offers on properties that met my criteria. By taking this approach, I hoped to avoid the pitfalls of hasty decision-making and make an intelligent, informed choice.

For about five months, I spent a great deal of time exploring the different neighborhoods and assessing their pros and cons. From historic homes dating back to the 19th century to midcentury modern homes from Seattle's post-World War II boom to modern new construction, there were plenty of options.

The most significant tradeoff to be made when choosing is location versus home size. I initially thought of a short commute and a large home as must-haves, but given my budget and the need to have space for three adults and three dogs, I had to sacrifice on the length of my commute. Many homebuyers make this same compromise. According to a Redfin survey, 89% of homebuyers would rather purchase a single-family home with a backyard than a unit in a triplex with a shorter commute.

Soon we focused our efforts on West Seattle, a neighborhood located on a peninsula across the sound from downtown. My commute to the office would take about 30 minutes each way by bus, where I could at least get some work done with the complimentary WiFi. This was a decent tradeoff, given that homes in West Seattle were about $100,000 less than homes closer to the downtown office.

Now in phase two, when I began viewing properties and making offers, I became hyperconscious of how my emotions might influence my decision-making. Common mistakes made by homebuyers include becoming too attached to a particular home, fixating on the list price instead of the market value, following the herd, and letting fatigue cloud judgment.

You must try to avoid falling in love too quickly with a home. Once you start picturing your future in a home, it can become challenging to walk away, and it can suck you into a fierce bidding war. Block out any and all thoughts about hosting holidays or your children playing in the backyard. Yes, it is a good idea to consider whether the home will suit you in the future, but if you become too attached to that future, you're working against yourself. People value a home more if they already feel like they own it.

Behavioral economists have a term for this: the endowment effect. The behavioral economist Jack Knetsch has found that people's willingness to sell an item they own was lower than their willingness to buy an item they did not own, even when the subjects knew ownership was assigned randomly. In one experiment, test subjects were given either a lottery ticket or cash. Most people opted to keep whatever form of compensation they had received first instead of trading it for the other option. For a variety of reasons, whether an aversion to feeling loss or a bias toward the status quo, people tend to get attached to the bird in their hand, even when there might be two in the bush.

List prices can also be misleading. In a hot market, sellers may advertise their homes for significantly less than what buyers are ready to pay in order to spark a bidding war. This amounts to a bait-and-switch.

As a buyer, don't take the bait. Don't anchor your expectations on the listed price. The anchoring effect refers to a person's tendency to focus on the first piece of information they hear while making decisions. In a famous lab experiment by the late Daniel Kahneman and Amos Tversky, research subjects spun a wheel of fortune with numbers from 0 to 100. The participants were then asked to guess the share of African countries that were members of the UN. Participants whose spin landed on a lower number were more likely to guess a low number. Participants whose wheel spin landed on a high number were more likely to guess a high number. The number the needle of the wheel landed on was completely irrelevant, yet the research subjects still used it as an anchor for their guesses.

The list price of a home may contain some helpful information about what the seller believes its value is. But ultimately the value of the house is set by the market.

If you need to, take a break. Losing bidding war after bidding war — which happens a lot — fosters fatigue and impatience, which can lead you to give up too soon or to buy a home you later regret.

Behavioral economists have repeatedly found that the quality of decisions deteriorates when an individual is overburdened with too many options. A study published in Health Economics found that orthopedic surgeons made worse recommendations toward the end of their shifts. Doctors were less likely to recommend surgery for patients who would have benefited just as much from surgery as patients seen earlier in the surgeon's shift.

Also, avoid following the herd. If others are ready to bid high, you could be tempted to do the same and stretch your budget. Herding behavior, another behavioral economics term, can lead to bubbles in the housing market or the stock market and was one of the culprits for the subprime mortgage crisis of 2008. The best way to avoid getting caught up in speculation bubbles is to not speculate in the first place and make offers appropriate only to your personal financial circumstances.

After spending a few weeks touring homes in the area, I came across a property that immediately caught my eye. It had everything my family was looking for. But there was one giant red flag: the home had been on the market for nearly a year without any offers.

Upon further inspection, I noticed that the house was located across the street from a strip mall and had a strange layout. Even though I liked the home, I wanted to avoid paying more than other buyers might think it was worth. So I kept looking.

When buying a home, you have no choice but to concern yourself with resale value. Life is unpredictable; there is always the chance you might not stay in the home long term, and you don't want to pay more than what you can resell it for.

There is tension in this advice: a homebuyer must avoid herding behavior by thinking for themself while simultaneously considering how other people might value homes in the future.

The way to walk the middle path is detached observation — recognize the behavior patterns of others without letting it unduly bias your decision-making.

About a month later, we found a home that seemed too good to be true. Ample space, close to public transit, even a view of Puget Sound and the Olympic Mountains. However, the home was 70 years old, so we would need to update the electrical, plumbing, and heating. Since we were renting elsewhere, we could delay moving to get this work done.

Things go wrong after you buy a home. Thinking that these problems won't end up costing you significant time and money is what behavioral economists call optimism bias: the tendency to overestimate the likelihood of favorable outcomes and underestimate the likelihood of unfavorable outcomes. The challenge, then, is to consider the risks and whether they are worth the reward.

As I prepared to make an offer to buy a home, I thought back to the hundreds of homeowners going through foreclosure that I interviewed while interning at the Boston Fed. They experienced bad luck on top of bad luck — deaths, divorces, medical emergencies, job loss, and a global recession. Any of those things could happen to me.

With all the repairs the house needed, I determined the maximum amount I could afford to pay was $950,000. I liked this particular home more than any other home on the market priced below $950,000, so I reasoned that this amount must be my value for the home. But I still had a nagging feeling that I was overextending myself and overpaying.

What if the roof sprang a leak? And what if, because I had already spent my savings repairing the plumbing, electrical, heating, and cooling, I didn't have any money left to repair the roof?

I could have kept going down the list of unlikely catastrophes. Instead, I focused on the unlikeliness of the scenario rather than the pain of the scenario. This helped me get out of my head and back to the task at hand. In economics, expected utility theory hypothesizes that individuals weigh uncertain outcomes according to their likelihood and the net benefit of each outcome. I shuddered at the thought of a bad scenario, like being laid off during a severe recession and housing-market downturn. However, according to expected utility theory, I should weigh that feeling against the likelihood of that scenario, which I reasoned to be a once-in-a-century event. In all likelihood, my job was safe, the economy was fine, and the value of homes would keep going up.

The home was listed at $840,000. I submitted my bid on the home for that amount. When you're deciding whether to bid above or below the asking price, look up how competitive the housing market is in the neighborhood and how the home compares to what else is on the market. If the market is cool, it's advisable to come in low. However, if the market is hot, the seller may completely ignore your offer if it's below the asking price.

Even though I offered $840,000, I was ready to go as high as $940,000. Later that day, my agent called me to deliver the good news: we won the home at list price. No one else even submitted a bid.

Daryl Fairweather is the author of "Hate the Game: Economic Cheat Codes for Life, Love, and Work" and the chief economist of Redfin.

This story is adapted from "Hate the Game: Economic Cheat Codes for Life, Love, and Work" by Daryl Fairweather, to be published by the University of Chicago Press on April 11, 2025. Copyright © 2025 by Daryl Rose Fairweather. Printed by arrangement with the University of Chicago Press.

• In the 1980s, Cynthia Jones wanted to own a home, but her husband didn't. They later divorced.
• After the split, she spent $28,000 on her first home for herself and her young daughter to live in.
• Jones, now 68, has taught her daughter the value of investing in real estate as a single woman.

This as-told-to essay is based on a conversation with Cynthia Jones, a 64-year-old retired librarian in Toledo, Ohio, who purchased several homes without a cosigner or spouse. The interview has been edited for length and clarity.

When I was in my mid-20s, I discovered that my husband had no interest in becoming a homeowner. This, along with other factors, ultimately led to our divorce.

In 1982, as a single woman, I purchased my first property for my toddler and me. Since then, I've bought and sold four homes. Now, at 68, I live in my fifth — and final — home.

I love being a homeowner because whether I use my home equity to make improvements, invest in other ventures, or simply enjoy the stability of ownership, it's mine to do with as I please.

I've also passed this lesson on to my daughter, who happens to be single, too.

Before turning 30, my daughter also purchased her first property alone, without a spouse. Prior to that, she earned her graduate degree. Now, at 44, she's enjoying traveling and her career.

We're two women embracing single life, traveling, and making the most of our future.

I have always encouraged single women to build wealth through homeownership and real-estate investing. Owning property is one of the few investments that allows you to retain the asset while still making money. In contrast, with investments like stocks, you must sell to realize any profit.

Owning a home could also have developmental benefits. Some research has shown that children who live in a family-owned home may fare better in school, among other things. I have seen some of these benefits firsthand.

I didn't need a spouse to be a homeowner

Homeownership wasn't the sole reason my husband and I got a divorce, but it was, as I say, the straw that broke the camel's back.

In 1981, I was living in Toledo, Ohio, in a townhouse with two bedrooms and one bathroom that my ex-husband and I rented for around $500 a month.

At the time, I was considering setting up a private music studio to teach violin lessons from home, which required more space. The apartment was under about 1,000 square feet and felt cramped. Plus, when you share walls with neighbors, you hear them, and they hear you. There was also no laundry facility in the complex, so we had to go to a local laundromat.

With a young child and the possibility of expanding our family, I realized it was the right time to stop renting and start building equity in a place of our own.

While owning a home is a core value for me, my ex-husband never wanted the responsibility of homeownership. He believed it would be too costly. My counterpoint was that while there are expenses associated with owning a home, you can't build equity in an apartment, pay it off, or pass it down.

Buying my first home after the divorce was surprisingly easy. Fortunately, my former boss's wife, a real-estate agent, knew an elderly man who was looking to sell his condo. He offered seller financing, and the process went smoothly with no issues.

In 1982, I paid $28,000 for his two-bedroom, one-bathroom condo. The master bedroom and closet were spacious, and my daughter was thrilled to have her own room. I also enjoyed a nice balcony overlooking a pond, which was a peaceful place to relax.

We lived in the condo for eight years before selling it for around $35,000. Although it was just a starter home, I was thrilled to finally own something. And now, even after all these years, my daughter and I still talk about the memories we made there.

I taught my daughter the importance of homeownership

After my divorce, I remained single and returned to school to study fine arts and business. My focus was solely on my education and raising my daughter.

Over the years, I purchased four more homes, with each sale helping to finance the next. I bought my final home — a four-bedroom, two-bathroom house — for $187,000 in 2019. It's now valued at nearly $300,000, according to Realtor.com.

In the future, it will need a few repairs, so some of my equity will go toward that, and the rest will be saved, perhaps in a high-yield savings account for emergencies. That's the beauty of homeownership — while real estate goes through up-and-down periods, over time, you're generally building equity.

In 2013, my daughter purchased her own home in Toledo for $130,000 — a four-bedroom, two-and-a-half-bath house in the same neighborhood as mine. My 90-year-old mother and my nephew are currently leasing it. Last year, a house across the street from hers sold for $313,000, so I estimate her home is now valued at around $300,000.

My father passed last August, so we're transitioning my mother to my home, which has a first-floor bedroom and bathroom. Although my daughter's house has a chair lift, my mom is reaching a point where even that could become a challenge. It's safer for her to be here with us.

In this situation, owning a home is definitely a benefit compared to living in an apartment because we can adjust or renovate it to suit her needs. Some apartments have accessibility issues. While some complexes are required by law to make accommodations, this isn't always the case. Even if a landlord agrees, renters can be expected to pay for the upgrades.

My daughter plans to sell her house, and then we'll all be living together in my home. We are joining the ranks of others enjoying a multi-generational household.

Our neighborhood is fantastic. Everyone knows each other and looks out for one another. Plus, we're lucky to be right next to a park that offers plenty of nature. This will definitely be our forever home.

I want to encourage more single women to become homeowners

I've made many financial blunders in my life — but owning homes hasn't been one of them.

My only regret in my homeownership journey is that I sold my previous properties instead of keeping them as rentals. I'd be in an excellent financial position now and could have passed that portfolio on to my daughter.

It would have also helped with retirement. The rental income would have served as my primary source of retirement income, alongside other sources.

A friend of mine, who also bought her first home as a single mother, has paid it off and also owns a paid-off investment property. Now, in retirement, she's reaping the rewards of those smart investments.

Many years ago, I obtained my real-estate license, but due to various circumstances, I didn't pursue using it at the time.

As part of my "encore career" or second act, I plan to return to real estate — not just for income, but to educate women about the benefits of homeownership and investing in real property.

I've kept up with reading about the real-estate market, and I'm aware that single women are outpacing men in homeownership. I think it's because women like me are no longer waiting for marriage or a partner to invest in their own homes. I think, in many cases, they are thinking long-term about securing their retirement and building wealth.

More women understand the financial benefits of homeownership, and as I always say, you'll always need a place to live — so why not make it something you own?

• Florida Gov. Ron DeSantis has proposed eliminating property taxes in the Sunshine State.
• The move is aimed at reducing financial strain on homeowners who've seen their taxes soar.
• But the revenue is critical for local government services, including the public school system.

Watching your home value soar is a great feeling for many homeowners. Getting hit with a much higher property tax bill as a result, not so much.

In Florida, Republican lawmakers are responding to homeowners' uproar over the rising levies, which have surged in recent years as demand for real estate has skyrocketed and prices have followed. Gov. Ron DeSantis recently began pushing to eliminate property taxes in the Sunshine State through a constitutional amendment.

Florida homeowners have faced some of the sharpest surges in property taxes in the country recently. The median property tax bill in Jacksonville and Tampa rose almost 60% between 2019 and 2024, a Redfin report found. Miami and Fort Lauderdale homeowners saw their taxes rise 48% in the same period.

The median Florida homeowners' tax bill spiked 47.5% between 2019 and 2024, the property data firm CoreLogic found.

Overall, US median property taxes rose from $2,287 to $2,826 between 2019 to 2023 — a 23.6% increase, BI reported earlier this year.

Florida's average effective property tax rate of 0.79% of a home's assessed value is a little below average compared to the rest of the country.

Real property taxes paid as a share of owner-occupied housing values tend to be higher in the Northeast, according to a Tax Foundation analysis of 2023 rates.

You can hover over the map below to see what rates looked like in each state and Washington, DC.

New Jersey, Illinois, and Connecticut had the highest rates among states and Washington, DC. Hawaii had the lowest rate at 0.27%. Rates were low in some Mountain states, including Colorado and Nevada.

Older homeowners have told BI that the growing taxes, alongside higher home repair and insurance costs, are particularly hard to manage on a fixed income. Florida is home to many of these property-owning retirees and has also seen a particularly sharp rise in insurance costs, adding to the burden on homeowners.

Property taxes fund critical local services and infrastructure, including schools, police and fire departments, and roads.

In Florida, which has no personal income tax, the locally-imposed levy brings in about $50 billion in annual revenue. Property taxes in the Sunshine State generate between 50 and 60% of school district funding, 18% of county revenue, and 17% of municipal revenue, the Florida Policy Institute recently reported.

Without the tax on homeowners, the state would need to double its sales tax to 12%, at least, to generate sufficient revenue, the Institute reported.

Florida would be the first state in the US to eliminate property taxes, though others have tried. Last year, North Dakota voters rejected a ballot measure to end property taxes based on a home's assessed value.

• The Getty Villa survived the Palisades fire, the worst in Los Angeles history.
• The villa shows how homeowners can protect their homes through construction choices and yard work.
• Anti-fire tricks include trimming low-hanging branches, installing double-pane windows, and cleaning gutters.

The Getty Villa is one of the most luxurious properties in the Pacific Palisades.

It's a sprawling estate and museum featuring a replica of an ancient Roman villa that was buried by the eruption of Mt. Vesuvius.

Now it's one of the sole surviving properties in its neighborhood after the most destructive fire in Los Angeles history, the Palisades fire, tore through in January.

Since then, wildfires also have ripped through South Carolina and Long Island. It's as good a time as ever to brush up on protecting your home, and the Getty's survival offers a few lessons.

The villa is owned by the J. Paul Getty Trust, which has the largest museum endowment in the world at more than $8 billion in 2023. Needless to say, it has more resources than the typical homeowner.

Still, the anti-fire measures at the Getty follow basic principles that people can apply in their own homes: fire-resistant construction and defensible space.

First thing's first: The Getty Villa is made of concrete and travertine.

Those materials are virtually fire-proof. Essentially, the villa was "built like a vault," Les Borsay, the facility's emergency preparedness specialist, told Business Insider.

Of course, most homes aren't pure concrete, but consider it when you're building a driveway or fence.

In urban conflagrations like the ones that ripped through Los Angeles in January, a wood fence or mulch landscaping can be the fuel that brings the fire to your house.

A fire-resistant roof can make a huge difference too, since embers accumulate there.

At the Getty Villa, roofs are made of tile. Wood shake or shingles, of course, are the most flammable roofing material. An ideal fire-resistant roof is made of asphalt, clay tiles, or concrete tiles, according to the California state fire agency, Cal Fire.

Then there are the openings into a home: windows, doors, and vents.

If enough embers get in through openings, or if a window breaks from the heat, fire can easily start inside the home.

That's why double-pane windows are the choice of fire-resistant construction experts like Clark Stevens, an architect working with the Resource Conservation District of the Santa Monica Mountains.

The Getty Villa has fire-rated doors, but homeowners can up their anti-fire game by installing a good seal around their doors.

Don't forget the garage door, too.

"It's bigger than any window in your house, usually, so these edges are really important," Stevens told BI as he showed off the garage-door seal at a model home he's built in the Santa Monica mountains.

Since people often use garages as storage spaces, they're also often full of flammable items. They can be a huge vulnerability if they're not properly sealed.

Vents into the Getty Villa's buildings are fitted with mesh to prevent embers from flying in.

Installing metal mesh screening with 1/8-inch spacing — or, better yet, 1/16-inch — can prevent embers from accumulating inside an attic or crawlspace and starting a fire inside your home.

The Getty Villa has a fancy water-supply system that's not a realistic option for most homeowners.

It involves a 50,000-gallon tank of water deep underground, a system of pipes and fire hydrants, and sprinklers throughout all the buildings on the property.

However, simple, cheap measures also helped save the villa, like trimming low-hanging tree branches.

According to Borsay, the groundskeeping team regularly cleared tree branches up to six feet above the ground.

On the hillside where fire traveled down toward the villa, in this photo, you can see where flames burned up the trunks of trees, but not into their leafy crowns. That helps prevent fire from jumping tree to tree, spreading more quickly.

"Nine out of 10 times, this boils down to two words: yard work," Pat Durland, an instructor for the National Fire Protection Association, told BI in 2023.

Flying embers can ignite plants or leaves in the yard or a roof gutter, which can then ignite your home. That's where defensible space comes in.

Experts recommend maintaining a five-foot zone around your house that's free of dry vegetation or other highly flammable materials.

The forest "may be showering us with embers, but what's burning our homes down and forcing us to run and evacuate is human fuels," Durland, who has 30 years of federal wildfire management experience, told BI after the Palisades fire.

"It's bark mulch, it's ornamental grasses. It's structures that are readily flammable" — all things humans can change.

That applies to other fuel sources, too, like cars.

A vehicle that goes up in flames can quickly ignite nearby structures, such as a car in a driveway helping fire spread to a house's outer wall.

Cal Fire recommends keeping vehicles at least five feet away from the house.

At the Getty, staff simply didn't want their cars to burn, so they moved them into the underground parking garage.

The Getty Villa has lots of vegetation, but staff keep the gardens well-watered and spaced apart, at a distance from the building itself.

After the five-foot no-fuel zone, Cal Fire recommends homeowners maintain a 30-foot "lean, clean, and green" zone.

"You are where the rubber meets the road. The things you do on your house and around your house are going to make the difference," Durland said.

That's certainly on display at the Getty Villa. It's still standing after the most destructive fire in the region's history because of its builders' construction choices and diligent groundskeeping.

Stop me if you've heard this before: Millennials have gotten screwed by the housing market.

The lack of affordable homes is one of the biggest reasons for the generation's economic shortcomings — why they can't catch up to their parents financially, live in cities near their friends, or even have as many kids as they want to. Several suspects have been blamed for this, including house-hoarding baby boomers and greedy corporate landlords. But the main issue was timing: A huge number of millennials reached their prime homebuying years after the 2008 financial crisis, right as the housing-market bust was pushing builders to cut back on construction. When it came time for millennials to claim their share of the American dream, the homes simply weren't there.

While the country's housing shortage, now measured in the millions of units, seems intractable, there are growing signs that it may not be a permanent state of affairs. Sure, lots of people have struggled to become homeowners over the past few years, sending prices to record highs and deepening the housing crunch. But population forecasts for the coming decade suggest a monumental shift is on the horizon. And millennials, after finally lifting themselves onto the homeownership ladder, may wind up with the short end of the stick yet again.

There's no denying that Americans are getting older. Slower population growth over the next decade and beyond, with more deaths and fewer births, will mean weaker demand for housing. This slowdown could come to a head in the 2030s, when members of Gen Z — a slightly smaller cohort than millennials — take over as the primary contingent of first-time homebuyers. Baby boomers will simultaneously be aging out of the market (economist-speak for dying), freeing up millions of homes nationwide. Unless immigration picks up dramatically to compensate, the combination of more supply and less demand could cause home prices to flatline or even drop.

Don't get me wrong: Cheaper housing is a good thing. But while a dip in home prices probably sounds like a godsend to the millions of renters hoping to become owners, it could be devastating for those who bought a place in the past few years. These homeowners, mostly millennials, are counting on their properties to grow in value and deliver a hefty financial return — the gilded path enjoyed by baby boomers. Like generations before them, millennials have tied up most of their wealth in their homes, which they'll rely upon to fuel their retirements or fund the purchases of bigger places down the line. Instead, when it finally comes time for them to sell, they may find that their nest eggs have turned out a lot smaller than they'd hoped.

Population trends, unlike the constant ups and downs of the economy, follow a steady drumbeat: People grow up, settle down, and eventually die. Demographics can't tell us exactly how many homes we'll need in a decade or two, but they can offer a pretty good idea. Builders and policymakers, however, haven't been great at reading the tea leaves. A recent paper from a team of researchers led by Dowell Myers, a demographer at the University of Southern California, argues that the lever pullers who control the housing supply have been out of touch for decades, relying on old data or focusing too much on the short term at the expense of the more distant future.

Take the current housing crunch. For years, demographic forecasts made it clear that a huge chunk of millennials would be looking to settle down in the late 2010s, signaling a need for a lot more houses. But homebuilding activity in 2011 dropped to its lowest level in 60 years, and credit availability tightened, making it harder to get a mortgage and creating more pent-up homebuying demand. Cue tough times for millennials.

But some real estate experts are starting to pay more attention to the underlying realities. I recently had lunch with Nik Shah, the CEO of Home.LLC, a housing analytics, consulting, and AI conglomerate. Shah and his team have gained prominence over the past few years for accurately predicting changes in home prices despite a tumultuous market. I was surprised, then, when instead of talking about the coming months, he mostly wanted to discuss the long term. Shah told me he's bullish on home prices for the next handful of years, forecasting mild year-over-year increases. But based on the demographic data, Shah expects home prices to stall out in the 2030s.

"Demographics play a critical role in home prices," Shah says. "And right now, the future projections on demographics are not rosy."

The biggest factor is deaths. In the coming decade, baby boomers will begin "aging out of the market" in droves. The size of the generation's adult population is second only to millennials, with roughly 66 million members who range in age from 61 to 79. But their numbers are projected to shrink by about 23%, or 15.6 million people, in the next decade, and by another 23.4 million people from 2035 to 2045. Boomers own about 41% of real estate nationwide, worth roughly $20 trillion, per the Federal Reserve. Their exodus will represent a sea change in the housing market.

All those boomer deaths, combined with a slight decline in birth rates over the next two decades, will work out to slower population growth. The result will be a lot less demand for homes. Data from the Harvard Joint Center for Housing Studies indicates that the total number of households in the US is expected to increase by 8.6 million over the next 10 years. In the past three decades, that figure ranged from 10.1 million households, in the 2010s, to 13.5 million, in the 1990s. From 2035 to 2045, household growth is expected to retreat even more, to a net increase of just 5.1 million, which would be the lowest growth rate in a century.

With more deaths and fewer births, the total number of US-born people in the country will shrink. The trajectory of the country's population, Daniel McCue, a senior research associate at the center, wrote in a report, will therefore be "entirely dependent on future immigration." Those household-growth projections from the Census Bureau assume that net immigration holds steady at 873,000 people a year for the next decade, roughly in line with the past 30 years. But even if you assume significantly higher immigration, McCue tells me, household growth is expected to decline over time.

The next generation of new homeowners won't represent a steep dropoff in demand. Harvard JCHS estimates there are now roughly 68 million Gen Zers, aged 16 to 30, compared to 68.8 million millennials. McCue says the real problem comes from the other end of the population equation, since a steady handoff to Gen Z homebuyers won't offset the wave of boomers exiting the housing market.

"It's not going to be enough to keep up with the pickup in losses, because the baby boomer generation is just so much bigger than previous generations," McCue tells me. "The pickup in mortality is going to outpace that."

Given the shifting demographics, the center says America probably needs to build about 11.3 million homes over the next decade and just 8 million new units between 2035 and 2045 to keep up with demand from new households (not factoring in the current shortage). These are fairly modest goals — in the 2010s, which included the weakest years for new construction in more than half a century, builders still finished almost 10 million units. In the 2000s, they built 17 million. As demand for homes slows down, McCue says, construction should have a chance to catch up.

That possibility should sound tantalizing to anyone hoping for an end to our housing shortage. But the imbalance between supply and demand has fueled an extraordinary run-up in home values — if that lopsidedness goes away, millennial homeowners may not see the same financial windfalls as their predecessors.

Millennials aren't young upstarts anymore. In 2030, they'll range in age from 34 to 49, according to Pew Research's cutoffs, which means many will be looking to move up the rungs of the housing ladder as they buy their first places or upgrade to bigger homes. They've already made up considerable ground in this department, with more than half the generation now owning their homes. For these fortunate millennials, the past few years of home-price gains have padded their net worths and contributed to a sunnier financial outlook.

While things are looking up, that may not last. A slowdown in home-price growth, or even outright declines, could leave a large chunk of millennials in a weird spot. Sure, for those who don't yet own a home, a breather in home-price appreciation could offer a chance to play catch-up. But among the millennials who are actually doing pretty well financially, most wealth is tied up in real estate and retirement accounts. An analysis by the Federal Reserve Bank of St. Louis suggests that from 2019 to 2022, the typical person born in the 1980s, otherwise known as an elder millennial, saw the value of their assets balloon by a whopping 57.3%, even after adjusting for inflation. Most of that increase — 41 percentage points — came from real estate.

So let's say household formation slows down as expected, relieving some of the pressure on home prices to keep going up, up, up. The team at Home.LLC projects that in this scenario, even if immigration holds steady, home prices will stay flat, maybe increasing by about 1% in some years and dipping slightly in others. That's a long way from the kind of market crash we saw in 2008, but it would mean far less wealth gains for today's millennial homeowners.

To illustrate this tension, compare a hypothetical baby boomer with a hypothetical millennial. Each buys a $300,000 home during their heyday. The boomer bought the house in 1994. Thirty years later, it's fully paid off and sells for about $1.21 million — a stunning gain of 305%, based on the typical home-price appreciation in the US over those decades. The millennial buys the house in 2010 and also holds on to it for 30 years. Its value grows by 2.5% each year from 2025 to 2030 and by just 0.5% a year from 2031 to 2040. The home ends up being worth about $813,000, a 171% increase. That's nothing to sneeze at, but you'd take the boomer's gains any day of the week.

"Obviously, the difference is pretty huge," Sid Samant, Home.LLC's lead economist, tells me.

But even the elder millennial in this example is lucky, because they got to ride out the historic home-value increases from the the pandemic. In Home.LLC's model, someone who bought a house in 2022 — say, a millennial who finally found their foothold in the housing market — would see their home's value increase by just 31% through 2040.

Forecasting home prices a decade from now is a fraught endeavor. Nobody expected baby boomers to stay in their homes as long as they have, throwing the housing market out of whack for everyone else. For policymakers, immigration is the easiest lever to pull in counteracting demographic realities, which also makes it the biggest question mark. And there's no way of knowing how future changes in the economy will alter construction activity or the homebuying calculus.

But demographic change is inevitable. And even McCue, the Harvard researcher who lives and breathes this stuff, is still wrestling with the downstream effects of our aging population.

"The extent to which we're going to start losing households was very eye-opening," McCue tells me. "I think we still need to get our heads around the implications of that."

If the housing shortage does indeed go away, it will hardly be mourned. But any big shift usually comes with some collateral damage. In this case, it could be homeowning millennials who get burned.

James Rodriguez is a senior reporter on Business Insider's Discourse team.

• LendingTree ranked the top US cities for households with children using data from the Census Bureau.
• The company considered factors like median household income and childcare costs across 50 of the largest US metros.
• Large, underrated cities like Salt Lake City, Minneapolis, and Cincinnati top the list.

Buying a home is a major undertaking that demands a lot of effort and, in today's real estate market, a significant amount of money — so it's important to get it right.

When moving with kids, there are many additional factors to consider, like if the area has quality schools and healthcare.

The economic research team at LendingTree analyzed data from the Census Bureau's 2023 American Community Survey to identify the best US cities for families among the 50 largest metropolitan areas.

LendingTree considered several factors, including median household income for families with children, the average childcare costs for an infant and a 4-year-old, and the time it takes individuals to commute to and from work.

The research team found that the cities where families thrive the most aren't the bustling, glittering metropolises of the East and West Coasts. Instead, they tend to be more laid-back cities in the Mountain, Midwest, and Southern regions; the top five cities are Salt Lake City, Minneapolis, Cincinnati, Kansas City, and Raleigh, North Carolina.

Matt Schulz, LendingTree's chief analyst, told Business Insider that these cities are generally more affordable for raising children compared to others the company found less ideal, like Miami, Las Vegas, New York, and Los Angeles.

"It's really expensive in New York City and other big cities in California," he said. "In those places, the cost of childcare may be more costly. In many cities on the coast, even if you're making a higher income, paying the bills can still feel difficult."

Below are the 10 best big US cities for families, according to LendingTree. Indianapolis and San Jose share the 8th spot on the list. While San Jose has a higher median home price compared to the other cities on the list, it also boasts the highest median income and a low percentage of children living below the poverty line.

For each city, Business Insider used the most recent population estimates from the US Census and median home price data from Redfin.

10. Louisville, Kentucky

• Population: 246,161
• Median home price: $255,000
• Share of children living in owner-occupied homes: 71.5%
• Median income for families with children: $86,595
• Share of children living below the poverty line: 18.1%
• Average childcare costs are for an infant and a 4-year-old: $1,567
• Average round-trip commute to and from work: 49 minutes

8. San Jose

• Population: 969,655
• Median home price: $1,387,027
• Share of children living in owner-occupied homes: 52.8%
• Median income for families with children: $205,285
• Share of children living below the poverty line: 7.5%
• Average childcare costs are for an infant and a 4-year-old: $2,899
• Average round-trip commute to and from work: 55 minutes

8. Indianapolis

• Population: 879,293
• Median home price: $240,000
• Share of children living in owner-occupied homes: 71.1%
• Median income for families with children: $102,418
• Share of children living below the poverty line: 13.3%
• Average childcare costs are for an infant and a 4-year-old: $1,970
• Average round-trip commute to and from work: 51 minutes

7. St. Louis

• Population: 281, 754
• Median home price: $220,000
• Share of children living in owner-occupied homes: 74.2%
• Median income for families with children: $107,086
• Share of children living below the poverty line: 13%
• Average childcare costs are for an infant and a 4-year-old: $1,998
• Average round-trip commute to and from work: 50 minutes

6. Austin

• Population: 979, 882
• Median home price: $536,500
• Share of children living in owner-occupied homes: 71%
• Median income for families with children: $133,266
• Share of children living below the poverty line: 10.6%
• Average childcare costs are for an infant and a 4-year-old: $1,770
• Average round-trip commute to and from work: 54 minutes

5. Raleigh, North Carolina

• Population: 482,295
• Median home price: $456,000
• Share of children living in owner-occupied homes: 73.9%
• Median income for families with children: $129,979
• Share of children living below the poverty line: 9%
• Average childcare costs are for an infant and a 4-year-old: $1,955
• Average round-trip commute to and from work: 53 minutes

4. Kansas City

• Population: 152,933
• Median home price: $255,500
• Share of children living in owner-occupied homes: 72.4%
• Median income for families with children: $103,180
• Share of children living below the poverty line: 10.6%
• Average childcare costs are for an infant and a 4-year-old: $1,903
• Average round-trip commute to and from work: 47 minutes

3. Cincinnati

• Population: 311,097
• Median home price: $226,000
• Share of children living in owner-occupied homes: 73.3%
• Median income for families with children: $106,971
• Share of children living below the poverty line: 13%
• Average childcare costs are for an infant and a 4-year-old: $1,868
• Average round-trip commute to and from work: 48 minutes

2. Minneapolis

• Population: 425,115
• Median home price: $318,000
• Share of children living in owner-occupied homes: 78.7%
• Median income for families with children: $132,055
• Share of children living below the poverty line: 8.9%
• Average childcare costs are for an infant and a 4-year-old: $3,131
• Average round-trip commute to and from work: 48 minutes

1. Salt Lake City

• Population: 209,593
• Median home price: $525,000
• Share of children living in owner-occupied homes: 75%
• Median income for families with children: $112,342
• Share of children living below the poverty line: 10.7%
• Average childcare costs are for an infant and a 4-year-old: $1,646
• Average round-trip commute to and from work: 47 minutes

• Billions of dollars in subsidies for more efficient appliances and rooftop solar remain frozen.
• Some states said they can't access rebates and grants that were set to be doled out to homeowners.
• Proponents say energy-efficient appliances and rooftop solar align with Trump's agenda to cut costs.

Many states still can't access hundreds of millions of dollars awarded for federal energy rebates and rooftop solar programs.

The freeze means some contractors in Arizona who have installed home rooftop solar and energy-efficient appliances are waiting to get paid for their work. In Colorado, state officials are delaying hiring more employees to implement the programs.

The confusion seems to be over President Donald Trump's executive orders to pause and revise climate programs as well as his short-lived federal spending freeze. Some $8 billion in rebates for energy-efficient appliances and retrofits, and another $7 billion for rooftop solar — set to be rolled out this year and authorized by the Inflation Reduction Act — are on the line.

Advocacy and trade groups said some states have been able to tap the money, but there is no clear pattern or communication from the Trump administration.

"There is absolutely no blue-red pattern, no geographical pattern. It is completely random," David Terry, president of the National Association of State Energy Officials, said. "We're awaiting that clarification from the administration so states can plan and move forward."

Proponents of the subsidies — including state officials and consumer advocacy groups — said they align with Trump's promise on the campaign trail to lower Americans' energy bills. Retrofitting homes with energy-efficient heating and cooling systems or rooftop solar is expensive up front but can save people money in the long run, they said. And lower-income homeowners and landlords who otherwise couldn't afford the upgrades were the target recipients.

Trump's energy policy has focused on boosting oil and gas drilling to drive down energy costs. Oil executives and economists say that won't happen anytime soon. In addition, potential tariffs on Canada and Mexico could hike gas prices across the country.

"These energy rebates will have real household impacts, not to mention the jobs they will create for contractors and electricians who have to do the work," Xavier Boatright, the Sierra Club's deputy legislative director for clean energy and electrification, told Business Insider. "Many red states like my home state of South Carolina have energy costs at an all-time high."

DOE didn't respond to a request for comment. In a court filing on February 9, attorneys for the Trump administration said that the department expects to resume issuing payments for home energy rebates. The filing doesn't mention the rooftop solar program.

The filing is part of a lawsuit that nearly two dozen states, including Arizona and Colorado, brought against the Trump administration's spending freeze. US District Judge John J. McConnell Jr. ordered the administration to immediately restore and resume funding on February 10.

Frozen accounts for energy rebates and rooftop solar

DOE's Home Energy Rebates are divided into two categories. One offers point-of-sale discounts on heat pumps, electric stoves, insulation, and new breaker boxes and wiring — capped at $14,000 per household.

They are targeted at low- and moderate-income homeowners. Landlords who rent to people in those income brackets are also eligible. The other category helps cut the costs of larger energy efficiency projects that slash home energy use by at least 20%.

EPA's Solar for All program similarly funds rooftop solar in low- to moderate-income communities across states.

Shayla Powell, a spokesperson for the agency, didn't comment on the specific status of Solar for All.<

Powell said that as of February 7, the EPA had worked to ensure all accounts with IRA funding were accessible in accordance with court orders.

But, several states told Business Insider they still can't access the funds. Arizona and Colorado are among the 11 states and the District of Columbia that launched their energy rebate and rooftop solar programs before Trump's inauguration.

Arizona was awarded more than $300 million in total. Adrianna Amato, a spokesperson for Arizona's Office of Resiliency, said in an email that the energy rebates are being processed and a vendor is building a list of qualified contractors completing work in homes that need to be paid.

"We have more than 1,000 applications in review for eligibility," Amato said on February 12. "When we go into the payment system, we are able to submit for reimbursement to draw down funds that have been spent, but we have not received our reimbursements for about two weeks. We only see a status statement that says it's pending agency review."

Will Tool, executive director of Colorado's Energy Office, said the state was similarly awarded nearly $300 million for energy rebates and rooftop solar projects.

Colorado had planned to roll out the rebates to the public early this year and was about to hire some employees to implement the solar program. The efforts are currently on hold.

"Our low- and moderate-income Coloradans would benefit from reduced energy costs, increased comfort, and reductions in pollution," Tool said. "We really do not understand why the Trump administration would want to freeze these programs in Colorado and across the country."

• My fiancée and I met in St. Petersburg, Florida, and lived there for seven years.
• We loved the hip downtown, but the area got too crowded and expensive for us.
• So, we moved close to her family in a small Wisconsin town and were able to buy our first home.

I've lived in North Carolina, Oregon, Illinois, and Florida, but Wisconsin feels like my true home after being here for just one year.

As a native Southerner, my family scoffed at my idea of moving to Wisconsin. After all, most people we know move from the North to the South to escape cold winters, not the other way around.

However, after seven years, my fiancée and I felt our Florida phase was over: We were ready to stop renting studio apartments and buy a piece of property with a comparable monthly cost.

We found exactly what we were looking for in Southeastern Wisconsin.

St. Petersburg became crowded and costly during our stint there

When we first moved to St. Petersburg, Florida, it still had the charm of an up-and-coming city.

New businesses were opening downtown, including coffee shops and craft breweries, which we felt signaled a new horizon for the once-sleepy retirement community.

Our predictions were right, and by 2021 we could feel the surge of new residents. The nightlife was vibrant, the restaurants were world-class, and the art scene was booming.

But new apartment buildings were also popping up, and it quickly became difficult to find even a studio-sized apartment with in-unit laundry that fit our budget.

We rented an accessory dwelling unit behind a bungalow-style house a few blocks from the ocean. It was a nice setup, but we quickly outgrew the 500-square-foot space.

After I landed a remote job, we agreed that our real-estate ambitions could take shape anywhere. Wisconsin, where my fiancée's family lives, was at the top of the list.

Real-estate affordability sealed the deal for our move to the Midwest

I fell in love with the landscape, culture, and overall vibe of rural Wisconsin, but house prices were our main motivation for leaving Florida and buying in the Midwest.

The average home price in Florida is $386,892, while the average home price in Wisconsin is $301,659, according to the Zillow Home Value Index.

Our studio apartment in Florida cost us $1,100 a month, not including utilities. Our current four-bedroom home cost about $200,000, which we're paying for with a standard 30-year mortgage. Our monthly payment is around $1,200 a month.

So, our monthly cost for owning a large home in Wisconsin is comparable to when we rented a small apartment in Florida.

Although Wisconsin does have higher taxes than Florida, we still save money by living in a rural area with cheaper food, gas, and utilities.

Our lifestyle change also helps us save. Fewer dining and entertainment options mean we go out less, so we instead opt for free activities, like hiking or swimming.

So far, we've enjoyed living in a smaller town

I grew up watching "The Andy Griffith Show" with my grandpa, so I always dreamt of living in a place like Mayberry where I'd know all my neighbors.

As a North Carolina boy, I never thought I'd find Mayberry in Southern Wisconsin, but I've fallen in love with our home here.

We enjoy the outdoors, so being close to beautiful lakes, hiking trails, and camping destinations was appealing. I even kept up my surfing hobby on Lake Michigan.

The town we chose is also full of charm. A new coffee shop, restaurant, and speakeasy bar opened in recent years, and we found ourselves in the same hipster atmosphere that made Florida so appealing — just on a smaller scale.

Pinellas County, Florida, is the most densely populated county in the state, with over 3,400 people per square mile. Walworth County, Wisconsin, has just 191.7 people per square mile.

We've been in our new house for almost a year, and we enjoy our new small-town lifestyle. I'm grateful remote work made more rural living possible for us.

Recently, we even visited our old stomping grounds in Florida. Although we'd missed the beach, we still didn't regret our decision to swap palm trees for pine trees.

• California's insurer of last resort will get a $1 billion bailout to cover LA wildfire damages.
• The bailout will likely lead to higher insurance premiums for California homeowners.
• This situation could escalate the state's insurance crisis and convince more insurers to leave.

Property owners across California will likely pay higher insurance premiums to help cover the damages of the Los Angeles wildfires after the state's insurance plan of last resort said it doesn't have enough funds to pay out its claims.

State regulators on Tuesday approved a $1 billion bailout of California's insurer of last resort, the FAIR Plan, which covers those who can't find insurance on the private market. The bailout will be funded by private insurers licensed to operate in the state — and under a new rule enacted last year, they can pass up to half of the cost on to their customers.

The FAIR Plan said it was set to run out of money by the end of March as losses piled up from the Palisades and Eaton fires. It would be the first time in 30 years that it had been unable to pay its claims.

The bailout comes after California's largest home insurer, State Farm, this month asked state regulators for emergency permission to raise homeowners' rates by an average of 22%, starting May 1, to avert a "dire situation" for the company's finances. As of February 3, State Farm had paid out $1 billion and said it expected to spend far more.

It's all part of a worsening home insurance crisis in California that was already underway before the LA blazes destroyed more than 12,000 buildings. Back-to-back fires in 2017 and 2018 decimated insurers' profits, prompting companies including State Farm, Allstate, and Farmers Insurance to either stop writing new policies, pull back coverage, or, in some cases, drop tens of thousands of property owners in the state. Insurers cited growing losses from wildfires and other disasters coupled with inflation and more expensive home repairs.

Most recently, beginning in July, State Farm dropped nearly 70% of its policyholders in the affluent Pacific Palisades neighborhood.

All of this has forced hundreds of thousands of homeowners into the FAIR plan, designed to be a backstop for those who can't find insurance on the traditional market. Participation more than doubled between 2020 and 2024 to nearly half a million homes — many of which were in areas devastated by the Palisades and Eaton fires.

Measures to keep home insurers from fleeing California

The bill for the bailout will be divided among private insurers based on their market share in the state. As of 2023, State Farm, Farmers Insurance, and CSAA Insurance held the largest percentage of policies in California, according to S&P Global data. They have 30 days to pay the FAIR plan and — under a rule change made by California Insurance Commissioner Ricardo Lara last year — insurers can request approval to pass up to half those costs onto residential and commercial policyholders.

The change was part of Lara's broader strategy to lure private insurers back to California to help stabilize the market. The rules also should make it easier for companies to raise premiums and factor in the costs of reinsurance and risks of future disasters. In exchange, insurers will have to expand coverage in communities most at risk of wildfires.

Lara said he approved the FAIR Plan bailout to protect consumers and blamed 30 years of stagnant regulations for putting more people at risk.

"The FAIR Plan must pay claims just like any other insurance company," he said in a statement. "I reject those who are hoping for the failure of our insurance market by spreading fear and doubt. Wildfire survivors can't cash 'what ifs' to pay for food and rent, but they can cash FAIR Plan checks."

Some consumer advocates on Tuesday threatened legal action to stop private insurers from surcharging customers.

"This gift to insurance companies rewards bad behavior and will only incentivize insurers to drop even more homeowners and force them onto the FAIR Plan in the future because there's no consequence for abandoning these families," said Carmen Balber, executive director of Consumer Watchdog in Los Angeles.

Are you a homeowner with a story to share? Reach out to these reporters at [email protected] and [email protected].

• State Farm wants to hike insurance premiums in California to help pay for LA wildfire damage.
• Insurance affordability has deteriorated with intensifying disasters and home-repair inflation.
• This hurts housing affordability and long-term property values.

The aftermath of the Los Angeles wildfires could exacerbate a mounting challenge for California homeowners: ever-higher insurance costs.

California's largest home insurance provider, State Farm, has asked state regulators for emergency permission to raise homeowners' rates by an average of 22%, starting May 1, to avert a "dire situation" for the company's finances following the fires, according to a Monday letter to the state's insurance commissioner. The company also asked to raise premiums for renters and condo owners by 15% and by 38% for landlords.

State Farm said it had fielded more than 8,700 claims related to the LA wildfires and paid out about $1 billion as of Saturday but expected to spend far more. The fires destroyed some of the city's priciest real estate, including in the Pacific Palisades, as well as Malibu's. They're set to be the costliest in US history. The company says wildfire payouts are placing "very significant pressure" on its ability to pay claims.

Some analysts estimate the damage could total between $250 and $275 billion, a bill that will be split among local and federal governments, insurers, and residents. But the full cost won't be clear for years.

State Farm said its finances were already strained from previous years' losses, leading one rating agency to downgrade it.

"Insurance will cost more for customers in California going forward because the risk is greater in California," the company said in the letter, adding that an emergency rate hike is "essential to more closely align costs and risk" and allow the company to rebuild capital.

A spokesperson for State Farm pointed Business Insider to its letter when asked for comment.

Intensifying home insurance market instability

California has long faced home insurance issues spurred by surging costs from more frequent and intense disasters coupled with rising home-repair costs and inflation. Since 2022, major insurance companies — including State Farm, Allstate, and Farmers Insurance — have either stopped writing new policies in the state, pulled back coverage, or in some cases, dropped tens of thousands of property owners.

State Farm in May 2023 stopped writing new homeowners policies in California. The following March, the company dropped about 29,000 homeowners in the state — including nearly 70% of policies in Pacific Palisades, where January's blazes caused some of the worst losses. That nonrenewal process is ongoing but was recently paused in Los Angeles County due to the wildfires. As of February 1, State Farm said it has more than one million homeowners policies in California.

State Farm said its finances had taken a hit over the nine-year period ending in 2024. During that period, the company paid out $1.26 in claims and expenses for every $1 collected in premiums. Its after-tax net losses totaled $2.8 billion. State Farm said its financial position will be further weakened by the LA wildfires.

State regulators last August approved Allstate's request to hike home insurance premiums by an average of 34%. State Farm said it filed for a 30% rate increase for homeowners policies last June, which is still pending. That would be on top of rate increases State Farm got approved in 2023, including a 6.9% bump in January and a 20% bump that took effect in March.

Ripple effects on housing across the country

The rising cost of insurance and the growing cancellations of private insurance policies are compounding housing affordability issues across the country.

A Senate Budget Committee investigation found that private insurers' nonrenewals spiked threefold in more than 200 counties between 2018 and 2023. Homeowners who are denied private insurance can often opt for their state's insurer of last resort, though these policies tend to offer more restricted coverage and higher premiums.

Rising insurance costs hurt homeowners and potential homebuyers alike, as well as renters who face increased costs passed along by their landlords. Some retired homeowners and others on fixed incomes are already struggling to deal with rising premiums, which, combined with rising property taxes, add up to more than mortgage payments for a growing number of homeowners.

Rising insurance costs are also expected to hurt property values in the longer term. A recent study from the research firm First Street found that a combination of rising home insurance premiums and falling demand, particularly in areas hardest hit by climate change, will erase almost $1.5 trillion in US real estate values by 2055. The report found that 40% of property-value losses will occur in communities it calls "climate abandonment areas," which are the most at risk of out-migration and insurance premium spikes.

This trend is particuarly alarming given that Americans are increasingly moving into parts of the country most vulnerable to extreme weather. In 2023, tens of thousands more people moved into the most flood—and fire-prone areas of the US rather than out of them, the real estate company Redfin reported.

Have you been impacted by rising insurance premiums or lost your coverage? Reach out to these reporters at [email protected] and [email protected].

• Developer and interior designer Robert Novogratz shared the mistakes people make during renovations.
• Novogratz has bought, renovated, and sold homes with his wife and business partner for over 25 years.
• Common missteps include not vetting contractors and going overboard with color and pattern, he said.

Home renovations are a practical way for homeowners to create the space they want without the high cost of buying new.

However, without careful planning and attention to detail, projects can easily cost more than expected — or might not turn out as envisioned.

Robert Novogratz — a New York-based designer and developer with over 25 years of experience buying, selling, and renovating homes and hotels alongside his wife and business partner, Cortney — has some advice.

The duo, who have seven children and call themselves the Novogratz, compiled the lessons they've learned throughout their years in the home renovation and design industry in a 2024 book.

"The best decisions we've ever made — the ones that felt right and true and are still with me today — were the ones we made when we were slightly limited, either financially or by square footage. Those are the moments that forced us to get creative," the couple wrote in the book.

The Novogratz have completed projects from Los Angeles to Brazil, including the bohemian-chic Hotel Dylan in Woodstock, New York, and the California mountain home of skateboarding legend Tony Hawk.

Here are seven mistakes homeowners often make when renovating and designing their homes, from choosing the wrong-sized furniture to hanging art too high, according to Robert Novogratz.

1. One mistake many homeowners make is not hiring the right contractor.

"When you hire a contractor, check all of their references and previous work extensively," he told Business Insider. "It's crucial for everything, from avoiding lawsuits to preventing thievery or shoddy work and making sure the job is finished on time."

Novogratz recommends checking at least three references and visiting their past projects in person before hiring a contractor. He said failing to conduct proper due diligence could cost homeowners hundreds or thousands of dollars.

"The world has become very litigious," Novogratz said. "Anytime someone walks on your property, you're at risk, so your general contractor needs to be insured. As a homeowner, you should also be included in their policies as 'additional insured.'"

2. People often choose furniture that's too large or too small for a room, which can throw off its entire vibe.

Novogratz said getting the scale right is key.

Furniture that's too small can get lost in a room, while pieces that are too large can overwhelm the space.

The same goes for rugs, he added.

3. Homeowners who don't stick to their renovation budgets might buy things they don't truly need.

Novogratz suggests homeowners create a wish list when renovating their home and follow it closely.

"You want to stick to that budget and then pick what you want in your home," he said.

4. Artwork is often hung too high on walls.

"Usually, 60 inches from the center of an art piece is how you hang something on a wall. But art is hung too high sometimes — I see that a lot," Novogratz said.

Hanging art at this height can ensure it's at eye level for most people, making it easier to enjoy. It also might help the room feel more intentional and organized.

5. People add too many colors and patterns to their homes, which can be overwhelming.

"My wife and I love color and patterns in homes, but sometimes it can be a problem," Novogratz said. "You might see checks, stripes, dots, or other patterns that just don't work together. It can be too much.

He emphasized that great interior design is about balance and making sure all elements complement each other in a cohesive and harmonious way.

"Editing is key in design — more isn't always more," Novogratz added. "I love many things, but sometimes less is better."

According to Novogratz, a home "should tell a story." Mixing and matching elements, like having "five different hardwood floors" or mismatched decor styles, can be a chaotic faux pas.

"I'm one of those people that believes everything has to make sense — the dots need to connect the chapters," he said.

6. Homeowners sometimes back-burner structural necessities in their quest to make spaces aesthetically pleasing.

"We all want to make the house beautiful, but when you're building, the most important thing is getting the basics right," Novogratz said.

"Don't just patch the roof — make it perfect," he added. "The plumbing and the electrical work might seem boring, but they're the most important. Make sure that doesn't come back to bite you in the ass."

7. People ignore their intuition. Don't — it's your greatest asset.

"Sometimes a home has great bones but a weird layout or floor plan," Novogratz said. "You have to get a little creative. For us — like anyone else — our gut instincts are usually right. When we've ignored them, we've been wrong."

Most single-family houses are built around a few main ingredients: wooden framing, a sloping roof that hangs over the sides, vents that keep air circulating through the attic. These features are key to churning out new builds quickly and relatively cheaply, and they've remained more or less the same for decades. They also make it easier for homes to burn.

The fires that swept through the Los Angeles area were the result of an extreme scenario: The confluence of hurricane-force winds, dry brush after months of drought, and the construction of old homes near combustible wildlands set the stage for the blazes to spread rapidly. The devastation in Altadena, the Pacific Palisades, and Malibu, where the Eaton and Palisades fires have destroyed more than 16,000 structures and killed at least 28 people, is especially stark given that California's building standards are some of the strictest in the world. In much of the rest of the country, the housing stock is even less equipped to face the rising threat of fire.

The ongoing fires bear a warning for other cities that have pushed residents farther and farther from the urban core in search of space to build. The risk of fire damage is greatest in areas known as the wildland-urban interface, or WUI — pronounced, charmingly, as "woo-ey" — where human-made sprawl meets undeveloped land. Data from the US Forest Service indicates the number of homes in WUIs grew by almost 50% from 1990 to 2020; about 48 million homes, or almost a third of residential units nationwide, are in counties that face a high risk of fire. Homeowners in California and beyond, architects and researchers tell me, must begin wrestling with how to fortify their own houses.

"As we've seen with LA and some of the other fires in California and Maui, it's not just a WUI issue anymore," Michael Eliason, the founder and principal of the Seattle architecture firm Larch Lab, tells me. "These are quickly becoming urban fires."

Perhaps the most confounding images from the LA fires show the outliers: homes miraculously left standing in the middle of flattened neighborhoods. Architects I've talked to generally agree that chance played a big role in deciding which structures survived. But as Sean Jursnick, a Denver-area architect, puts it, the owners of the spared houses may have "created some of their own luck."

Measures to reduce the risk of fire damage include straightforward design tweaks such as streamlining exteriors to eliminate the nooks and crannies where stray embers can settle, or getting rid of vegetation that could shuttle flames to the main structure. Then there are the cutting-edge materials — wrapped in jargon like "cementitious fiber-reinforced composite building system" — that offer alternatives to the flammable lumber that dominates home construction.

Interventions by both homeowners and builders are growing more necessary as the risk of fires increases — and as insurers get pickier about which properties they'll cover. Soon, many people across the US may have no choice but to build smarter.

Scott Long has spent decades in pursuit of a material capable of unseating lumber as the go-to option for home frames. The basics of home construction haven't substantially evolved since the 1800s, when building the skeletal structure out of dimensional lumber — your classic two-by-fours, etc. — came into fashion. Wood components, Long says, are "literally the worst possible product you could use" in the event of high winds, flooding, or fire since they burn (unlike concrete) and aren't as sturdy as, say, steel. Masking wood with something like magnesium oxide board or stucco siding, both of which are more resistant to fire, is fine, Long says, but "not a solution."

"It's time for change here," Long tells me. "We can't keep building the way we've been building up against these types of historic events."

Given these problems, Long founded NileBuilt in 2019, building homes primarily out of fiber-reinforced concrete panels with foam insulation in the middle. The company's model homes look simple and modern, all flat roofs and sharp edges, and it says the materials can withstand temperatures of more than 2,000 degrees Fahrenheit — the panels, unlike the walls of traditional homes, won't combust from the extreme heat of a neighboring fire. Long says the cost of building his homes roughly matches that of wood-frame houses. A quiet start to 2025 for his company has turned into a frenzy; he says that even before the fires, the waitlist for one of the homes was just under 3,000 people.

Eliason isn't calling for the kind of paradigm shift in building materials that Long suggests. He pointed to a widely seen X post showing a Pacific Palisades home that survived with little apparent damage, saying it was "not a concrete house or brick house or anything" — other measures its owner took may have mattered a lot more. And wood has its own advantages: It's cheap, and lumber production doesn't release nearly as much carbon as concrete or steel. In the event of an earthquake, its pliability is a huge plus. For all these reasons, Eliason says, "going away from wood-frame construction seems really shortsighted."

Instead, he advocates more-modest tweaks that can add up to real risk mitigation. A streamlined, boxy structure offers fewer places for stray embers to linger. These embers are often good fuel for a wildfire's spread — they can travel several miles by air, then enter through vents or settle on a combustible part of the home, igniting another conflagration. By getting rid of nooks and crannies like roof overhangs (also known as eaves) or little windows that jut out of the roof, builders can reduce fire risk. Materials also matter: Builders can wrap a home in noncombustible mineral wool and install drywall capable of withstanding an hour of direct contact with flames. Metal roofs are preferable to classic shingles.

The house Eliason referred to has many of these features: stucco finishes, a metal roof, tempered windows, no roof vents or eaves on its sides. But there's an even smaller adjustment that may have helped keep the flames away: a buffer around the house devoid of vegetation. Jursnick recalls a conversation with another architect who likened nearby plants and bushes to the tinder you'd use to light a campfire. Removing those is an example of a little thing even weekend-warrior home-improvement types can do to better protect their homes. Another is replacing old vents with newer models designed to deny entry to embers. Costlier measures include swapping in a metal fence for the wooden version or opting for a new metal roof.

Decades-old homes, like many in the Pacific Palisades and Altadena, are much more susceptible to fires than newer builds. But retrofitting them to meet modern codes is more expensive than adding fire-resistant features to new construction from the get-go. Research from the environmental economists Patrick Baylis and Judson Boomhower suggests that California homes built after the state tightened its building codes in 2008 are about 40% less likely to be destroyed in a fire than a 1990 home exposed to an identical blaze. Another study of the 2018 Camp Fire, which destroyed most of the town of Paradise in northern California, found that only 11.5% of single-family homes built within city limits before 1997 survived, compared with a 38.5% survival rate for those built that year or later.

Boomhower walked away from his study convinced that more local governments should mandate fire-resistant building codes rather than wait for builders and homeowners to wise up to their benefits. Normally, an economist like him might be skeptical of government rules for something that is so obviously a good investment — buyers of new homes should be motivated to protect what is likely their biggest asset, codes be damned. But Boomhower's study found limited adoption of these best practices in areas that didn't require them.

"Homebuilders and home buyers are just not always aware of the risks and aware of the low-hanging-fruit options for mitigation," Boomhower tells me. The data also suggests there are spillover effects that could protect non-improved homes: Investments made by just one homeowner can help stunt the spread of a blaze, making it less likely that their neighbors' homes burn down. And insurers may be more willing to extend policies to homeowners in areas where they know many builds meet these criteria.

This is far from just a California issue. A handful of states, including Montana, Nevada, and Pennsylvania, and 200 local jurisdictions have adopted the International Code Council's standards for building fire-resistant homes in WUIs. Austin, for example, adopted the code in 2015 and is considering an update that would expand the WUI's borders in hopes of protecting more homes. Homeowners that go beyond even the strictest codes, either during the initial construction or as part of a retrofit, may score discounts from insurers or state-level tax breaks.

But even with city-level and homeowner-level interventions, Eliason tells me, "there's no guarantee of protection." The logical thing, he says, would be to build more densely in areas far from the WUI to limit the number of homes at risk in the first place. In the absence of that kind of fix — which would involve sweeping changes to the zoning laws that say what you can build and where — better materials and design can make a difference.

Jursnick, the Denver-area architect, has been thinking about this stuff a lot recently. He's working on plans for an apartment building in an area just outside Boulder that was burned in 2021 by the Marshall Fire, which destroyed more than 1,000 homes. Much of the community input, he says, has revolved around how to prevent that kind of tragedy from happening again.

"If we're going to keep building more homes in those areas," Jursnick tells me, "I think we need to be more thoughtful of how we build, and adapt our building strategies in those areas to acknowledge that risk."

James Rodriguez is a senior reporter on Business Insider's Discourse team.

• Accessory Dwelling Units (ADUs) have become a popular alternative to traditional homes and apartments.
• Three people who built and moved into ADUs shared with BI how they improved their lives.
• One person said moving into an ADU "was the best decision we ever made."

For newlyweds Aislyn and Ali Benjamin, purchasing a traditional home in Danville, California — a small city just over an hour's drive east of San Francisco — wasn't financially feasible.

It's easy to see why. Data from Realtor.com shows that the area's median home sale price is about $1.9 million as of December.

The Benjamins weren't keen on moving too far from Danville in search of a more affordable home, nor were they interested in renting long-term. So, they opted for another solution: building an accessory dwelling unit, or ADU, in their parent's backyard.

Today, they live in a 1,200-square-foot, three-bedroom, two-bathroom ADU in San Ramon, a city neighboring Danville. The home cost $500,000 to build, which the couple paid with their parents' help.

"This was the best decision we ever made," Ali Benjamin told Business Insider. "It allowed us to save so much money and live where we wanted."

ADUs are an affordable entry to homeownership

ADUs are compact housing units, typically 150 to 1,200 square feet, depending on location. On average, they cost between $100,000 and $300,000 to design and build, though additional expenses — such as site preparation, inspections, utility hookups, and permits — can drive up the total cost.

Thanks to their affordability and minimal land requirements, ADUs have become a popular alternative to traditional homes and apartments, particularly for first-time homeowners like the Benjamins, who navigated high home prices, mortgage rates, and a shortage of available homes.

To boost the supply of affordable housing, several states, including California, New York, and Vermont, have supported ADU construction by offering grant programs to help homeowners finance the building process.

In California, where most backyard homes are built, the state's Accessory Dwelling Unit Grant Program has provided grants of up to $40,000 to qualified homeowners — it's been instrumental in driving the growth of ADUs across the Golden State.

According to an April report from the Urban Institute, ADUs accounted for just 8% of permits and 5% of completions in California in 2018. By 2022, however, they represented 18% of total permits and production.

A couple built an ADU to give their adult son more independence

People build ADUs for various reasons, including generating income by renting out the ADU or their main home. Others build ADUs to create comfortable, semi-independent living spaces for aging parents or adult children who may need assistance or support.

Take Todd Kuchta, a 58-year-old engineer who built an ADU in his Napa, California, backyard for his 26-year-old son, Jacob, who has autism.

As Kuchta's son grew older, he desired more independence from his parents but still needed their help with daily tasks like cleaning, taking medication, and preparing meals.

Unable to afford a larger home or an assisted living facility for their son, Kuchta and his wife hired Bay Area-based ADU builder Villa to construct a 480-square-foot, one-bedroom, one-bathroom tiny home on their property.

The ADU cost over $248,000 to build. The Kuchtas received financing through Napa County's Affordable ADU program, which provided a $63,000 forgivable loan. They also secured a $160,000 loan from a credit union as a second mortgage.

The new living arrangement has mutually benefited the Kucthas and their son.

"Jacob really enjoys living on his own — he's thriving," Kuchta told BI.

He added that he and his wife's "stress has significantly decreased, and they have peace of mind knowing they can still provide the emotional support he needs."

A woman built an ADU in her backyard to age in place

The growing trend of multiple generations living together, either under the same roof or on the same property, has fueled the rise of "granny pods" — small outbuildings designed to provide support while allowing older adults to age in place and maintain their independence.

Struggling with the stairs in her two-story home, 72-year-old Wilder-Abrams moved into a 560-square-foot, one-bedroom, one-bathroom granny pod in her backyard in 2022.

Meanwhile, her 34-year-old daughter moved into the home she had lived in for 35 years — a 2,000-square-foot, three-bedroom, two-bathroom home — with her 3-year-old daughter.

"I was ready to downsize and have a smaller place to live and take care of," Wilder-Abrams told BI. "The home is in an urban area, so there are a lot of possibilities for my daughter, too."

The ADU cost $350,000 to build. Wilder-Abrams secured a second mortgage on her home to finance the construction, as the original mortgage had been paid off years ago. Her daughter now pays $1,500 monthly rent, covering the new mortgage payment.

Beyond the financial benefits, home swapping has provided Wilder-Abrams with valuable physical and emotional support. She said having her daughter nearby was crucial to her recovery after knee surgery last year.

"The first few days, she stayed with me to change the ice packs regularly," Wilder-Abrams said. "It was so convenient for both of us."

• Thousands of LA County homeowners face a volatile home insurance market.
• In recent months, State Farm — California's largest home insurer — dropped thousands of policyholders.
• Some have turned to the state's insurer of last resort.

Thousands of California homeowners at risk due to the Los Angeles County fires find themselves exposed in a volatile home insurance market.

Last year, California's largest home insurer — State Farm — canceled thousands of policyholders' plans across LA County, including the Pacific Palisades and parts of Santa Monica and Calabasas, that are under evacuation orders and warnings as the fires rage. Nearly 70% of State Farm policyholders in the affluent Pacific Palisades neighborhood were dropped by the company beginning in July 2024.

The following table shows the ZIP codes that were under evacuation orders or warnings as of Wednesday afternoon that had the highest rate of nonrenewals from State Farm last year.

Several other major insurers have dramatically restricted their coverage across California in recent years, citing surging costs from more frequent and intense disasters coupled with rising home repair costs and inflation.

Thousands of LA County homeowners who haven't been able to obtain private insurance have joined the ranks of those covered by the state's insurer of last resort — the Fair Access to Insurance Requirements (FAIR) plan. The FAIR plan is regulated by the state government and backed by a slew of private insurance companies. But its premiums tend to be much higher than typical private insurers and its coverage is often more restricted.

This table shows how FAIR insurance coverage has changed in the above ZIP codes between 2023 and 2024.

As private insurers have stepped back in recent years, the number of residential FAIR plan holders across the state jumped 123% between September 2020 and September 2024. The FAIR plan's dollar-value residential exposure surged from $271 billion in September 2023 to $431 billion in September 2024.

It's not clear how many homeowners impacted by the LA County fires are uninsured. Most mortgage lenders require homeowners to purchase insurance, and some require additional insurance for specific disasters, including fires.

Some major home insurers, including Farmer's — the second-largest in California — have recently begun to expand their offerings in California after the state announced new regulations requiring insurers to cover a certain percentage of homes vulnerable to fire in exchange for allowing them to use future risk modeling to calculate premiums.

In 2023, California had the fourth-highest home insurance nonrenewal rate among states, according to a recently released Senate Budget Committee report. Six of the top 10 counties in the country with the highest rates of nonrenewals by large home insurers in 2023 were in California, the report found.

But rising home insurance costs and rates of dropped policies are nationwide problems. The National Bureau of Economic Research recently reported that average home insurance premiums spiked by 13%, adjusted for inflation, between 2020 and 2023. The share of home insurance policies from large insurers that weren't renewed increased last year in 46 states, the Senate report found. And more than 200 US counties saw their non-renewal rates spike threefold between 2018 and 2023.

Areas more vulnerable to disasters, including flooding, wildfires, and hurricanes, have seen the biggest spikes in premiums and dropped policies.

"Our number one priority right now is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of this tragedy," a representative for State Farm told BI.

A representative from the California FAIR Plan Association also told BI in a statement that the insurer is "prepared" to handle the wildfire impact, and "has payment mechanisms in place, including reinsurance, to ensure all covered claims are paid."

Representatives for Farmer's did not respond for comment.

Have you been dropped by your home insurance company or are you facing a steep premium increase? Email this reporter to share your story: [email protected].

• Older people, including homeowners, are increasingly facing housing insecurity.
• The phenomenon is in part due to housing shortages, inflation, and an aging population.
• Some homeowners told BI they live in fear of losing their properties.

Owning a home has long been a pillar of the American dream, but for many older homeowners, it's no longer providing the retirement security it once did.

Many baby boomers are struggling with rising home repair costs, insurance premiums, and property taxes while also facing a scarcity of affordable retirement housing options. And working all their lives isn't enough to prevent a growing number of older people from experiencing homelessness.

Rising rents and home prices, largely caused by a housing shortage and other cost-of-living spikes, are hitting older adults especially hard. Overall homelessness surged to its highest level on record last year, according to the federal government's most recent count conducted in January 2024. And older people make up a growing share of those losing their homes: The portion of homeless single adults 50 or older is estimated to have grown from about 10% to 50% over the past three decades.

"The cost of housing and the cost of everything, quite frankly, is getting more and more expensive," Marcy Thompson, vice president of programs and policy at the National Alliance to End Homelessness, told Business Insider. "And this is particularly true for older adults who are on fixed incomes."

Homeowners on the brink of homelessness

Valerie Miller, 67, has owned her mobile home in San Bernardino, California for almost 35 years, but she's still struggling to pay rent for the plot her home sits on and can't afford needed repairs and maintenance.

Miller, who never married or had children, is planning to wait until she's 70 to collect Social Security but has already begun dipping into her meager retirement savings and worries she'll never be able to leave her job at a truck-permitting company. Miller has considered selling her home, but she doesn't know where she could find more affordable housing.

"Sometimes I lie awake at night and I'm so worried," she said. "I don't want to use up all my savings, and then what do I do? Live off credit cards or go with the homeless people?"

The increase in homelessness among older Americans is a result both of demographic shifts — the baby boomer generation is getting older — and rising housing and other costs. The number of older homeowners and renters who spend more than 30% of their income on housing costs has surged in recent years.

Allison Nickerson, executive director of LiveOn NY, a nonprofit group focused on improving living conditions for aging people, argued that Americans tend to underestimate the number of older people suffering. A fifth of Americans 50 and older have no retirement savings.

"There's this feeling that baby boomers and older people are pretty comfortable," she said. "But when you actually look at the the amount of people who are struggling, and then looking at the cost of living that has gone up, inflation that's gone up, people are just getting left behind."

Barbara Willing, 69, an artist who's worked on and off at Walmart and Lowe's, has struggled to make a steady income in recent years as she suffers from an autoimmune disease. She bought her home in Victor, Montana — a small town 35 miles south of Missoula — more than twenty years ago and is still paying off her mortgage.

"I have to keep the place I'm in, even though it's inadequate in a lot of ways, because to move would cost me so much more," Willing said, noting that her home has electrical and plumbing issues. She said that the fear of losing her home "continues to loom and gnaw on my conscience and nerves."

Willing has been out of work since July and is looking for her next sales job, but she worries her aging car won't last long traveling the nearly two-hour roundtrip commute to Missoula should she find a job there. Without any retirement savings, she said she's relying largely on her small Social Security checks, a local food bank, SNAP, and disability benefits to make ends meet.

"I've gotten over the anguish, the humiliation of having to go to the food bank," she said. "I actually like going there now, and I tell them how great they're doing."

• An extra tax on home sale profits over $250,000 was designed to target wealthy homeowners.
• But as home values have soared, the tax is impacting middle-income people, too.
• Two older homeowners said they wanted to downsize but had been discouraged by the tax.

Many older homeowners have benefited from soaring home prices in recent years, but as they look to cash in and downsize, some are discouraged by a federal tax that applies to a growing number of home sales.

Since 1997, home sellers have had to pay federal capital-gains taxes on profits above $250,000 for a single person and $500,000 for a couple. The policy was designed to target the most affluent. But because the tax isn't indexed for inflation and home values have climbed so much, it's begun to impact middle-income people too.

Some older Americans who have retired or are near retirement told Business Insider that the tax had deterred them from downsizing and that they feared it would eat into crucial savings. The tax may be discouraging empty nesters from selling their larger homes to growing families, worsening a shortage of starter homes.

The share of home sales subject to the tax has more than doubled in the past few years. In 2023, 8% of US sellers made more than $500,000 in profit on the sale of their homes, the property data firm CoreLogic found. That's up from 1.3% in 2003 and 3% in 2019. If the threshold had been adjusted for inflation, the $250,000 cutoff for individual home sellers in 1997 dollars would be about twice as high — $496,000 — in 2024 dollars.

"What we know, anecdotally, is that people are feeling locked in," Selma Hepp, the chief economist at CoreLogic, told BI. "There are a good share of people for whom this is the only source of wealth savings."

Some retirees are reluctant to sell

David Levin, 71, has lived in Manhattan Beach, California, since 1978. Now retired, Levin and his wife want to sell their four-bedroom house and buy a smaller home in their neighborhood that they can grow old in.

Their housing investments have paid off — the couple paid $632,000 for their home in 1991, and it's now worth an estimated $2.8 million, according to a local real-estate agent Levin consulted. While they've benefited from their soaring home equity, selling at that price or higher would come with an extra-large tax bill.

Levin estimates that he and his wife will have to pay several hundred thousand dollars in capital-gains taxes when they sell their home. Because the couple is relying on cash from their home sale to support them through retirement, Levin doesn't think they can afford to stay in Manhattan Beach — or live anywhere close by.

"If we sell our house, pay the capital gains tax, with what we're left over with we can't find anything to buy that's anywhere as nice as the home we're in," he said.

Levin, who operated retail stores before he retired, and his wife, a homemaker, both volunteer at their local community college, and they live on Levin's Social Security checks and retirement savings. But they're relying on their home equity to help support them as they age. "Our house has been a piggy bank, so the house is what secures our retirement," he said.

Levin was quick to point out that he felt these were "rich people's problems," but they're indicative of how even well-off boomers are struggling to retire comfortably in the communities in which they've built their lives.

"How can you feel sorry for us? I mean, we have so much more than most people have," Levin said. "It's just the circumstances of our lives make us stuck in our home."

Relief may be on the horizon

Some Washington policymakers are taking note of the strain on some of their constituents. Democratic Rep. Jimmy Panetta, whose district includes several pricey coastal California housing markets, has introduced a bill that would double the tax exclusion to $500,000 for individuals and $1 million for joint-filing couples and index it to inflation. The More Homes on the Market Act is designed to incentivize more homeowners to sell and boost the housing inventory.

"I firmly believe that such a simple, straightforward fix would allow homeowners to downsize, sell their homes, and secure their nest-eggs," Panetta said in a statement to BI. "It's also a commonsense way to help expand the housing market, tackle housing affordability issues in our communities, and better ensure that more families have access to owning a home."

Raising the threshold for the capital-gains tax on primary home sales and indexing the tax for inflation would be a boon for buyers and sellers alike, Hepp said.

"It would provide some velocity in the market and maybe release some inventory that's not efficiently utilized, like baby boomers living in a really large home when they would prefer a smaller home," she said. The real-estate company Redfin reported that as of 2022, empty-nest boomers owned twice as many homes with three or more bedrooms as millennials with kids.

Andrea S., a 60-year-old homeowner in the Los Angeles neighborhood of Sherman Oaks, hopes Congress will pass Panetta's bipartisan bill before she sells her home to pay for her retirement.

"I'm kind of hanging on for that, quite frankly, and hoping they get it through," she said.

The former agent and producer, who requested partial anonymity to protect her privacy, bought her two-bedroom bungalow in 1994 for $245,000. A Zillow estimate reviewed by BI says the home is now worth about $1.3 million. She's weighing a slew of different factors in deciding when to downsize, including rising home insurance premiums and mounting home maintenance costs.

"I'm gambling," she said. "Do I wait for that big write-off? What happens if they don't insure houses anymore? Is that going to make the cost of my house go down?"

• Homeowners are increasingly being dropped by their private home insurers.
• Regions with the highest nonrenewal rates are most prone to wildfires, hurricanes, and other disasters.
• A new Senate report warns of economic risks as climate change destabilizes insurance markets.

Homeowners across the country are increasingly facing a stark new reality: they're losing their home insurance.

The share of home insurance policies from large insurers that weren't renewed increased last year in 46 states, a report released Wednesday by the Senate Budget Committee found. The increasing frequency and intensity of disasters like wildfires, hurricanes, and flooding and the rising cost of rebuilding have pushed many insurers to drop customers or hike premiums. This has left thousands of homeowners scrambling to find new insurance policies or joining the growing ranks of those going without insurance.

More than 200 counties saw their non-renewal rates spike threefold between 2018 and 2023. Counties in Northern California and South Florida saw among the highest rates of nonrenewals. Coastal counties in Massachusetts, Mississippi, and North Carolina also saw dropped policies soar. Manhattan ranks 20th, with rates of dropped policies rising from 1.25% in 2018 to 4.11% in 2023.

The national scale of home insurance nonrenewals was previously unknown because insurance companies are regulated at the state level. The National Association of Insurance Commissioners said not all states collect granular data about the availability and affordability of coverage in some areas. The association in March announced an effort with state insurance regulators to try to fill the gap.

Senate Budget Committee Chairman Sheldon Whitehouse launched his own investigation into the homeowners' insurance market last year. He received nonrenewal data from 23 companies accounting for about two-thirds of the market. In testimony on Wednesday, Whitehouse said he demanded nonrenewal data because experts suggested policies being dropped were an early warning sign of market destabilization. He also said they correlated with higher premiums.

The American Property Casualty Insurance Association, a lobbying group representing insurance companies, said nonrenewal data doesn't provide "relevant information" on climate risks. Many factors, including a state's litigation and regulatory environment, factor into nonrenewal decisions, the association said.

The association added that more costly weather disasters, combined with inflation and overbuilding in climate-risk regions, are making insurance less affordable for many Americans.

Home insurance premiums are rising in many regions across the country. The National Bureau of Economic Research recently reported that average home insurance premiums spiked by 13%, adjusted for inflation, between 2020 and 2023.

Most mortgage lenders require homeowners to purchase insurance, and some require additional insurance for specific disasters, including flooding. Insurers refusing to offer coverage can hurt home values because homes that can't be insured in the private market are less desirable to potential buyers.

The Senate Budget report warned that the insurance crisis will get worse as the climate crisis fuels more frequent and destructive disasters, including hurricanes, wildfires, and flooding. A destabilized insurance market could "trigger cascading economy-wide financial upheaval," the report said.

"The failure to deal with climate change isn't just driving up the cost of homeowners' insurance, it's making it harder for families to even find homeowners' insurance, and that makes it harder to get a mortgage," Whitehouse said in a statement to Business Insider. "When the pool of buyers is limited to only those who can pay cash, it cuts off pathways to homeownership—particularly for first-time homebuyers—and risks cascading into a crash in property values that trashes the entire economy."

Have you been dropped by your home insurance company or are you facing a steep premium increase? Email these reporters to share your story: [email protected] and [email protected].

• Zillow analyzed millions of listings to find key words and phrases being mentioned more.
• It identified five trends it predicts homebuyers will keep clamoring for in 2025.
• Interest in vintage-inspired interiors and electric-vehicle chargers, for example, is booming.

The American home is having an identity crisis.

Many newly constructed homes are smaller, with fewer hallways and shrinking backyards — yet they are significantly more expensive than just a decade ago.

As homebuilding trends evolve, buyers and homeowners are also reimagining what they want from their living spaces.

By analyzing hundreds of home features and design styles from millions of for-sale listings in 2024, Zillow has identified the top emerging home trends for the year ahead.

Zillow found that in response to higher living costs and growing concerns about the climate crisis, buyers will want homes that are eco-friendly, resilient to climate disasters, and equipped with smart home technology.

"Technology has empowered homeowners to live more sustainably and affordably, which is increasingly important to prospective buyers," said Amanda Pendleton, Zillow's home trends expert. She added that homeowners and buyers are simultaneously "looking to the past" to give their homes character, even in "the most high-tech environments."

According to Zillow, here are five home trends to watch in 2025, from solar-powered energy systems to vintage-inspired interiors.

1. Buyers want homes that protect them during natural disasters

The climate crisis is driving a rise in extreme weather events including hurricanes, wildfires, and tornadoes across the US.

The increasing frequency and intensity of these storms have encouraged people to seek homes that offer enhanced safety during natural disasters — that are hurricane-resistant, for example. Homes like that may reduce the risk of costly repairs.

Zillow found that mentions of flood barriers in for-sale listings have increased by 22% since 2023, while references to water catchment systems have risen by 19%. The use of the term seismic retrofitting — the modification of structures to enhance their earthquake resistance — is up 20%. Drought-resistant turf yards also appear in listings 14% more frequently than last year.

2. People want to live in eco-friendly homes

Homebuyers don't just want a house — they want one equipped with smart, eco-friendly technology that helps reduce their carbon footprint.

Zillow found that the fastest-growing sought-after feature this year is whole-home batteries. These systems, often paired with solar panels, store excess energy for use during cloudy days or power outages. Mentions of this feature in for-sale listings have increased by 62% compared to last year.

Buyers are also showing greater interest in electric vehicle (EV) chargers, which have appeared in 34% more Zillow listings compared to 2023, and induction cooktops, up 5% from last year.

3. People are on the hunt for "cozy" homes that offer comfort and solace in stressful times.

Zillow found that as the pandemic-era dip in home prices fades, so too does some buyers' preference for larger living spaces.

In search of greater affordability, many are now gravitating toward cozier homes that may also be more budget-friendly.

As a result, mentions of "cozy" — sometimes a euphemism for "small" — in for-sale listings have increased by 35% compared to last year.

6. Buyers are looking for spa vibes at home.

According to Zillow, as homeowners prioritize mental and physical well-being, "wellness design" is emerging as a major trend in homes.

Data from the company shows that the share of for-sale listings featuring wellness-focused amenities has increased by 16% compared to last year.

One such feature gaining traction with buyers is the wet room, a waterproof space that combines a shower and bathtub into one seamless area, often without a shower curtain or glass divider.

Popular in Europe and Asia for years, Zillow predicts wet rooms may make their way into more American homes.

5. Homebuyers are embracing a vintage aesthetic.

Young homebuyers will reject the minimalist styles favored by older generations and embrace vintage interior designs featuring antique furniture, floral patterns, and tapestries.

Zillow's data highlights a growing interest in nostalgia-driven design, with mentions appearing in 14% more for-sale listings compared to 2023. Similarly, references to "vintage" have increased by 9%. The company also found that bibliophilic decor and home libraries are gaining popularity, with mentions rising by 22% in listings.

It's not just the "I Love Lucy" set that homebuyers want to channel — many will also aim for "The Gilded Age."

Zillow found that mentions of Victorian-era sculleries — hidden back kitchens used for meal prep and entertaining —have increased by 8% in for-sale listings this year compared to last.