I AM
When considering where to invest or buy a home in the Houston area, two key expenses can significantly impact your monthly budget: property taxes and homeowners insurance. These “hidden costs” often vary more than home prices themselves—and can make or break your investment strategy or affordability.
Let’s take a look at how property taxes and insurance premiums compare across popular Houston suburbs in 2025.
Why These Costs Matter
-
Property taxes in Texas are among the highest in the U.S., since there’s no state income tax.
-
Insurance costs are rising, particularly in areas prone to flooding, hurricanes, and hailstorms.
-
Together, these costs can add $500–$1,200+ per month to a homeowner’s bills.
Property Tax Rates by Suburb (2025 Estimates)
| Suburb | Avg. Tax Rate | Notes |
|---|---|---|
| Katy | 2.6%–3.2% | Master-planned communities often include MUDs and HOA taxes. |
| Cypress | 2.7%–3.4% | High tax rates in new developments; some areas lower if older. |
| Sugar Land | 2.2%–2.9% | More established; rates are moderate, especially in older neighborhoods. |
| Pearland | 2.6%–3.1% | Mix of newer and older homes; rates vary by development. |
| The Woodlands | 2.0%–2.5% | Lower taxes thanks to mature infrastructure and less reliance on MUDs. |
| Spring | 2.6%–3.3% | Newer developments carry higher MUD taxes. |
| Friendswood | 2.2%–2.6% | Stable, family-friendly suburb with moderate taxes. |
| Humble/Kingwood | 2.4%–3.0% | A mix of city and county jurisdictions impacts rates. |
What’s a MUD?
Municipal Utility Districts help fund infrastructure in new areas—and can significantly raise your tax rate, especially in newer developments.
️ Home Insurance Costs Across Suburbs
| Suburb | Avg. Annual Insurance (for $350K home) | Notes |
|---|---|---|
| Katy | $2,800–$3,500 | Tornado and hail risk slightly elevated. |
| Cypress | $2,600–$3,400 | Higher premiums in flood-prone zones near Addicks Reservoir. |
| Sugar Land | $2,200–$2,800 | Lower flood risk in many areas; newer roofs reduce premiums. |
| Pearland | $2,400–$3,200 | Some neighborhoods are impacted by past hurricanes. |
| The Woodlands | $2,000–$2,600 | Lower insurance costs due to elevation and strong building codes. |
| Spring | $2,500–$3,200 | Rates depend on location relative to flood zones. |
| Friendswood | $2,200–$2,900 | Consistently moderate insurance costs. |
| Humble/Kingwood | $2,500–$3,400 | Subject to flooding and windstorm zones near Lake Houston. |
Flood insurance is a separate policy and required in FEMA-designated flood zones. This can add $600–$2,000+ annually, depending on elevation and history.
Total Ownership Costs: An Example
Let’s say you’re comparing two homes priced at $350,000:
-
Katy (New Build):
-
Property Tax: 3.2% → $11,200/year
-
Home Insurance: $3,200/year
-
Total: ~$1,200/month (taxes + insurance)
-
-
The Woodlands (Established Area):
-
Property Tax: 2.2% → $7,700/year
-
Home Insurance: $2,200/year
-
Total: ~$825/month (taxes + insurance)
-
That’s a $375/month difference, or $4,500/year—just based on location, not price!
Tips for Buyers & Investors
-
Always look at the effective tax rate, not just the base rate.
-
Ask your agent for the full tax breakdown, including MUD, school, and county taxes.
-
Get a flood zone determination before you make an offer.
-
Compare multiple insurance quotes and consider bundling with auto.
-
Consider the total cost of ownership—not just the listing price.
Final Thoughts
When comparing Houston suburbs, property taxes and insurance can shift affordability more than you think. While places like Katy and Cypress offer new construction and community amenities, the tax and insurance costs can be higher. On the flip side, areas like The Woodlands and Sugar Land offer stability and lower long-term costs—even if home prices are slightly higher.
Whether you’re buying your dream home or making your next investment, running the numbers beyond the mortgage is the smartest move you can make.