Interest Rates, Insurance, Taxes, and Energy Costs - Homeownership in RI Is Getting Expensive

Interest Rates, Insurance, Taxes, and Energy Costs - Homeownership in RI Is Getting Expensive

Home prices have doubled in Rhode Island over the past decade, and mortgage rates have jumped from less than 3% to just under 7% in the past four years.

The cumulative impact is that homeowners are getting hammered by price increases, but price and interest rates are only two of the factors.

Now, the price for nearly every other cost associated with homeownership is increasing, many by double digits.

GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST

Incomes have not kept pace.

 

RI Home Prices and Interest Rate Increases

In 2021, the median price of a single-family Rhode Island house was $365,000.

Now, the median price of a single-family home is $465,000.

Between price and interest rate increases, the monthly cost of the same home — both with 20% down — has jumped from about $1,600 a month to more than $2,800, a 75% increase in just four years.

But that is just part of the picture.

Other home-related costs in Rhode Island are exploding, too. Insurance and energy costs are both increasing and higher than the national average. And, there are more cost increases coming.

In cities like Providence, taxes are going up.

One top realtor has a warning about raising taxes too much.

 

Home Insurance

Nationally, home insurance rates rose by an average of 11.3% in 2023, with some states and regions experiencing even larger increases, according to S&P Global Market Intelligence and other sources. 

In 2024, Rhode Island homeowners saw their home insurance costs increase by 11.6%, with the average annual cost reaching $2,070, which is 8% higher than the national average. 

Over the past two years, Rhode Island homeowners have seen increased home insurance costs, jumping 12.4% in 2023 and 11.6% in 2024. 

 

Home Energy Costs

According to one analysis, on average, Rhode Island residents spend about $240 per month on electricity. That adds up to $2,880 per year.

Rhode Island's rate is 4% higher than the national average electric bill of $2,780.

The total energy costs in Rhode Island are $690 per month, according to an analysis published in the New York Times in 2024.

Rhode Island has the 11th highest energy costs in the nation.

 

Taxes

In Providence, Mayor Brett Smiley increased taxes his first year in office, and now, in his third year, he is seeking a massive tax increase — as much as 8%.

Robert Rutley of Mott & Chace Sotheby’s International said the final numbers are not set yet on how much higher taxes are going.

"What I can tell buyers right now is that if you're willing to purchase a home at a certain price you should probably expect to be taxed at that price," said Rutley. "We don't know what the mil rate is going to be right now so it potentially could go much higher according to our city leadership right now.”

Rutley warns that increasing taxes above the cap of 4% in a year has a serious adverse impact on moderate-income homeowners.

“If you're wealthy, it's annoying, it's a mosquito — you're watching your money, you're annoyed by it, but it's not life or death," said Rutley. "When you're somebody who's on a fixed income, you have to make a choice between paying your new taxes...or buying food, buying medication, or actually having just, you know, a free lifestyle."

"So this is a dangerous precedent to increase taxes, period, but to break that 4% rule, that sets a precedent where this can happen anytime in the future. [And that] is pretty dangerous,” said Rutley.