Hiding in plain sight: the rising cost of owning a home

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While it’s true that the price of homes is at an astronomical level in the U.S., no one seems to be talking much about how the cost of keeping and maintaining a home has gotten significantly pricier as well. Even many Realtors and lenders may not be mentioning this element of home-buying these days, as it might come as a surprise to many buyers — especially after the fact.

Realtor.com’s Ana Teresa Solá explains, “The “hidden costs” of homeownership add up to an average $18,118 annually, or $1,510 a month, according to a new report by Bankrate.com. The national figure includes the average costs of property taxes, homeowners insurance, and electricity, internet and cable bills. It also includes home maintenance, which was estimated at 2% a year of the value of a home.”

Bottom line? According to the report, the price tag of such hidden costs within a typical, single-family home in the U.S. is roughly 26% higher compared with four years ago, the report found. In 2020, the same expenses amounted to $14,428 annually, or $1,202 a month. When you think about it, that extra $300 or so a month is often a car payment or enough of a difference to make the idea of a vacation a distant reverie.

Solá quotes Bankrate analyst Jeff Ostrowski: “It’s just important to understand that you’re buying a lot more than a mortgage payment. You’re also buying all these additional costs that you’re gonna have to figure out how to pay for.” And that’s on top of the national median mortgage payment rising approximately $144 or 6.8% from a year ago, according to the Mortgage Bankers Association.

Of course, these expenses most often come into pay on resale (older) homes — not new construction. “Because of the lack of building, we know that homes that are being purchased are older,” said NAR’s Jessica Lautz. Homebuyers have to make a compromise along the way, and often it’s the age or the condition of the home.

The survey found that the median age of owner-occupied homes in the U.S. is about 40 years old — just about when a given house may need system upgrades like a new HVAC system, new windows, or a new roof (which lasts about 30 years).

“Those are the kind of costs that can really add up quickly,” Ostrowski said, as first-time homebuyers especially don’t realize the true cost of maintenance and repairs because it’s all simply part of the learning process of becoming a homeowner, according to Ostrowski. “Once you’ve been a homeowner for a while, you realize everything that can go wrong,” he adds.

The heads up Ostrowski offers is this: It’s a mistake to spend your entire savings for the down payment only to end up “house poor.” “Then you move in, and you don’t really have any money left for repairs and maintenance, so you wind up running up credit card debt or taking out some kind of higher interest debt to pay for that,” he said.

Because of bidding wars over the past few years, many homebuyers on the market waived home inspections — especially those making cash offers. But those buyers are not in the same sort of vulnerable position as a first-time buyer — someone who has never gone through the process. And heavy competition is still going on all over the country, as the average is still three offers for every home that’s listed for sale.

An inspection is an important safeguard that can help you go into the purchase understanding some of the maintenance tasks and repairs that may be on the horizon, says Solá. And it can be a factor that can inflate the ongoing costs after you close on a house.

Realtor, TBWS


All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Millenium Home Mortgage, LLC NMLS # 51519 Licensed by the NJ Department of Banking and Insurance, CT Mortgage Banker 1st and 2nd Mortgages Licensed as MHM Home Mortgage, Licensed by the Pennsylvania Department of Banking. All interest rates, fees and programs are subject to change without notice. THIS ENTIRE SITE IS NOT INTENDED AS A SOLICITATION FOR MORTGAGE LOAN CUSTOMERS IN NEW YORK, PENNSYLVANIA, OR CONNECTICUT.

Joseph Galayda

Licensed NJ Mortgage Banker

NMLS: 65345

Millenium Home Mortgage LLC

211 North Ave East, Westfield NJ

Company NMLS: 65378

Office: 908-588-7601

Cell: 908-875-7918

Email: jgalayda@mhmlender.com

Web: http://jgalayda.mhmlender.com

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Joseph Galayda

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Licensed NJ Mortgage Banker

NMLS: 65345

Cell: 908-875-7918


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