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Bought During the COVID Boom? Here's What Homeowners Are Dealing With in Today's Market

  //house-home.news-articles.net/content/2025/10/0 .. meowners-are-dealing-with-in-today-s-market.html
  Published in House and Home on Wednesday, October 1st 2025 at 13:32 GMT by Investopedia
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The New Reality for Homeowners Who Bought During the COVID Boom

When the pandemic hit in early 2020, the U.S. housing market experienced a seismic shift. With historically low mortgage rates—some as low as 2 %—and a surge in remote work, many families seized the opportunity to upgrade from cramped apartments to suburban sanctuaries. According to Investopedia’s recent feature, “Bought During the COVID Boom? Here’s What Homeowners Are Dealing With in Today’s Market,” those who closed on homes during this boom are now facing a host of challenges that were largely invisible a year ago.

Below is a concise summary of the key takeaways, organized around the article’s main themes: rising rates, equity erosion, higher costs of ownership, and the practical steps homeowners can take to navigate this new landscape.

1. Mortgage Rates Have Gone from “Low” to “Sky‑High”

• Historic lows: In March 2020, the 30‑year fixed‑rate mortgage hovered around 2 %, a level that attracted a flood of buyers, many of whom had never owned a home before.
• Current reality: By the end of 2024, rates have climbed to the mid‑to‑high 6 % range, and projections for 2025 suggest they could stay there for a while.
• Impact on payments: Homeowners who locked in low rates now face a dramatic increase in monthly payments—sometimes 30–40 % higher—when they refinance or take out new mortgages on higher‑priced properties.

The article underscores that refinancing isn’t a panacea: the higher base rate means the cost of borrowing is higher than it was during the boom, so homeowners can only reduce their payments if the difference between the old and new rate is large enough to offset the higher interest.

2. Home Equity Is Shrinking, Not Growing

• Appreciation slowed: While the pandemic era saw rapid home‑price gains—often 20 % or more over two years—recent market data shows that price growth has slowed to roughly 4–6 % annually.
• Mortgage amortization: Because borrowers made larger down payments, the principal balance on many new mortgages is relatively low. Yet the combination of slower price appreciation and higher rates means the equity cushion shrinks.
• The “underwater” risk: Although most new buyers still have a positive equity position, the margin has narrowed. In the event of a market correction, some could find themselves in a difficult spot.

Investopedia’s piece notes that the average home value in 2024 is still above the 2019 baseline, but the growth trajectory is no longer as steep, making it harder for homeowners to realize the expected gains.

3. The Hidden Costs of Homeownership Are Rising

a. Homeowners Insurance

• Premium inflation: Insurance companies have lifted premiums by an average of 10 % since the pandemic peak.
• Risk factors: Older homes, which many pandemic buyers purchased on the cusp of age, often come with higher insurance costs due to outdated electrical and plumbing systems.

b. Property Taxes

• Assessed values climb: Local governments are reassessing properties at higher values, and property taxes have jumped 5–7 % in many markets.
• Budget shock: Many homeowners, who had budgeted for taxes based on pre‑COVID rates, now face a severe budgetary squeeze.

c. Maintenance and Upgrades

• Renovation costs: With demand for larger, well‑equipped homes, many buyers have had to invest in kitchen remodels, smart‑home upgrades, and additional storage.
• Ongoing upkeep: The article points out that routine maintenance—like roof replacement and HVAC servicing—can cost $5,000–$10,000 annually in some regions.

4. Practical Strategies for Navigating the Post‑Boom Market

The Investopedia article offers a range of actionable steps for homeowners:

1. Reevaluate Refinancing Options

• Rate‑buy‑down: Some lenders offer a “rate‑buy‑down” program where homeowners pay a lump sum upfront to lock in a lower rate.
• Fixed vs. variable: While variable rates may be lower initially, the stability of a fixed‑rate loan could be preferable if rates remain volatile.

2. Use Home Equity Wisely

• Home Equity Line of Credit (HELOC): If the property’s equity has increased, a HELOC can be a flexible tool for covering renovations or large expenses without selling.
• Cash‑out refinance: This may make sense if you can refinance at a rate that’s low enough to offset the cost of the new loan, especially if you plan to use the cash for high‑return investments.

3. Cut Costs Where You Can

• Utility efficiencies: Installing smart thermostats, high‑efficiency HVAC systems, and LED lighting can reduce monthly utility bills.
• Insurance shopping: Compare quotes and consider bundling home and auto insurance to gain discounts.

4. Stay Informed About Local Market Conditions

• Market research: Regularly check local MLS data and consult with real estate agents to gauge whether resale values are holding.
• Plan exit strategy: If you anticipate a drop in home value, consider selling before rates climb further.

5. The Bottom Line: Patience and Proactivity

The article closes on a pragmatic note: homeowners who bought during the COVID boom must adapt to a market that has fundamentally changed. While the initial surge was driven by record‑low rates and a need for space, the post‑pandemic environment has seen rates rise, appreciation slow, and costs climb.

The key takeaways for readers are:

• Reassess your mortgage and budget as rates increase.
• Monitor your equity; the cushion is shrinking.
• Control ongoing costs through smart upgrades and insurance shopping.
• Use equity strategically, but avoid overleveraging.
• Keep a long‑term perspective: If your goal is to build wealth, staying in a property that retains value can still pay off—just be mindful of the hidden costs.

Investopedia’s analysis serves as a reminder that the “COVID boom” was a unique confluence of circumstances. Homeowners who bought during that period are now on a new, less forgiving trajectory, and the best way to protect their investment is through careful planning, informed decision‑making, and a willingness to adapt.