The 4 Hidden Costs of Homeownership You Need To Plan For
Written by
Heather Altamirano
Edited by
Chris Cluff
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Disappointed and frustrated house hunters have watched the market skyrocket to 7% interest rates and surging home prices. Still, in addition to the rising costs of buying a home, houses are expensive to maintain.
The pricey ongoing expenses seem to never stop. Sure, there are mortgage payments, upkeep, and taxes, but there are also $15,000 or more hidden costs a year that many homeowners don’t consider, according to a Zillow and Thumbtack report. Several costly factors should be considered when purchasing a home and here’s a closer look at fees to take into account.
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Hidden Expenses to Look Out For
When buying a home, it’s not just about the mortgage and purchase price — that’s just to start. According to the report, utility bills, property taxes, insurance and essential home maintenance can accumulate to a staggering $14,155 a year for the average U.S. homeowner.
“That’s an extra $1,180 per month on top of a typical mortgage payment,” the report stated. For first-time home buyers grappling with affordability challenges in today’s market, it’s crucial to grasp and allocate these less apparent expenses when determining a budget and price range they can afford.
Maintenance Is the Biggest Hidden Cost
Overall, the report found maintenance ($6,413 a year) was the biggest out-of-pocket expense most don’t factor into owning a home. The annual cost of home maintenance that Thumbtack categorizes as essential includes:
- Appliance maintenance
- Carpet cleaning
- Central air conditioning maintenance
- Deck staining and sealing
- Duct and vent cleaning
- Fireplace and chimney cleaning
- Full-service lawn care
- Gutter cleaning and maintenance
- Heating system maintenance
- House cleaning
- Pressure washing
- Roof maintenance
- Sprinkler and irrigation system maintenance
- Tile and grout cleaning
- Tree trimming and removal
- Water heater maintenance
- Window cleaning
“The average cost of upkeep is highest in Los Angeles and Chicago, totaling $8,639 and $7,722, respectively,” per the report. “Meanwhile, homeowners in Las Vegas can expect to pay just $3,467 per year to maintain their homes.”
Three Unavoidable Costs
Utilities, property taxes and homeowners insurance are other costly expenses that will raise your monthly bills, which averaged $7,742 in total nationally.
Where You Live Makes a Difference Financially
The study found, “New Yorkers pay the highest property taxes, topping $9,000 per year, while utilities cost the most in Hartford, Connecticut, averaging $4,443 a year. Costs for homeowners insurance vary based on home value, so homeowners in the most affordable metro areas, such as Pittsburgh and Cleveland, have the added benefit of lower insurance bills.”
In addition, the hidden costs can rack up even more in already expensive metro areas like San Francisco, New York, and Los Angeles, where extra costs can add up to $22,000 annually. Per the report, “Hidden homeownership costs are the lowest in Las Vegas ($9,886); Asheville, North Carolina ($11,318); and St. Louis ($11,824).”
To compile data for the study, researchers used property taxes to calculate the “median effective tax rate in each metro area multiplied by the area’s median home value as measured by the Zillow Home Value Index.”
Utility costs were calculated from 2022 state averages. For insurance costs, “this analysis assumed homeowners pay 0.5% of their home’s value every year, which was calculated as 0.005 multiplied by the area’s median home value as measured by the Zillow Home Value Index.”
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