The “Hidden” Costs of Homeownership Add Up to $9K a Year

published Aug 7, 2017
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(Image credit: Esteban Cortez)

You found the perfect home for sale, and even better, the monthly mortgage payment works out to almost exactly to what you’re paying in rent right now. Great! Now, simply add another $750 a month on top of that, and you’re golden!

Wait, what? Yup, the “hidden” costs of homeownership tally up to $9,080 a year on average, according to a new report by Zillow and Thumbtack. That includes some stuff you hopefully know about, like property taxes and home insurance, but also utilities and basic maintenance you might not be dwelling on as you bounce between open houses each weekend.

Most renters are familiar with the “extras” they have to pay above and beyond the base rent — heat, hot water, electricity… maybe renter’s insurance if you really have your act together. But there are a lot of costs bundled into that rent payment that tenants don’t have to think about, such as maintenance, condo fees, and very basic utilities like water and sewer.

Nationally, homeowners paid an average of $6,059 a year in home insurance, property taxes, and utilities. That figure varied dramatically depending on local home values and taxes, though, topping $9,000 in Los Angeles and Austin, Texas, cresting $10,000 in Boston and San Diego, and peaking at $13,019 in the San Francisco area. Homeowners paid the least in Indianapolis ($4,699) and Charlotte, N.C. ($4,986).

Maintenance costs, which were based on Thumbtack’s six most-requested services — carpet cleaning, yard work, gutter cleaning, HVAC maintenance, and house cleaning — added another $3,021 per year on average.

Now the good news is, I don’t see how house cleaning is a hidden expense of home ownership. You can get your apartment cleaned, too, and your landlord probably isn’t going to foot the bill. And even beyond mopping the floors, homeowners can do basic maintenance tasks like yard work and gutter cleaning themselves, saving at least some money (even if they dread the job).

Owning a home is expensive in ways you never expect.

But there’s no way around it: Owning a home is expensive in ways you never expect. When we bought our nearly 100-year-old and not necessarily well-maintained home nine years ago, it was like sitting down at the high-stakes poker table by accident, or moving from a base-10 system to something completely foreign: After living a life based in denominations of $20 or $100, suddenly every repair seemed to cost some multiple of $500 or even a thousand dollars.

Beyond that, while I was aware of most of the hidden costs when we bought our house, there have been two expenses that did kind of catch me by surprise.

One is the annualized cost of necessary, long-term improvements. Consider a roof: Angie’s List members report spending an average of $11,000 to replace an asphalt roof, which should last 20 to 30 years. If you own your home for the duration of a 30-year mortgage, it’s almost guaranteed that you’ll need to replace the roof at some point — or else sell at a discount to someone who doesn’t mind some missing shingles. And the cost of that very necessary future roof, spread out over the life of your 30-year mortgage, works out to $367 a year, or about $30 a month. Add to that hot-water heaters, which generally crap out after 6 to 12 years, interior or exterior painting, and other infrequent but required upkeep — all priced in multiples of $500, remember! — and there goes your bank account.

(Image credit: Leanne Bertram)

The other expense is one I knew about, but didn’t fully appreciate when it comes to the long term. Property taxes are typically pegged to your home’s appraised value. Our taxes aren’t particularly high for the region, but as home values have shot upward the past five years, our taxes have, too— even as the tax rate has stayed exactly the same. And a more expensive house requires higher-priced homeowners insurance as well, since it would cost more to repair or replace after a calamity.

Don’t get me wrong: A huge upswing in your home’s value over time is, frankly, amazing, and nothing to complain about — it’s one way long-term wealth is created, and opens up new options like home equity loans. But we have no intention of selling our home (and thus cashing in on that equity) for many years. And in the meantime, the rising ancillary costs of property taxes and insurance are eating into our monthly budget — to the tune of hundreds of dollars more than we were paying just three years ago, even as our base mortgage payment has stayed the same.

Basically, owning a home is expensive, in all kinds of ways, including some you may not have thought about. But even those big costs feel like a small price to pay for a home of your own.