The Economics Behind Home Ownership Costs
Owning a home entails preparing for both anticipated and unforeseen expenses, and the extent of these hidden costs can vary significantly across different regions.
According to a recent study by Bankrate, the average annual cost of owning and maintaining a single-family home stands at $18,118, marking a notable 26% increase since 2020. This study delves beyond mortgage payments, encompassing expenses such as property taxes, homeowners insurance, maintenance costs, and utilities like electricity, internet, and cable bills. Comparing these costs to a similar study conducted four years ago reveals a significant uptick in financial burdens for homeowners. Nationally, these additional expenses translate to an extra $1,510 per month atop mortgage payments, significantly higher than the $14,428 annual average recorded in 2020.
“First-time homebuyers often view the closing of a house purchase as the culmination of financial obligations,” stated a Bankrate spokesperson. “However, these figures underscore that, in many ways, homeownership initiates a new phase of financial responsibility. Homeowners shoulder substantial costs, and it’s particularly crucial for first-time buyers to brace themselves for significant expenditures beyond monthly mortgage payments.”
The concealed costs of homeownership exhibit considerable variation across states. Topping the list are Hawaii, California, Massachusetts, New Jersey, and Connecticut, with average hidden costs ranging from $23,515 to $29,015 annually. Conversely, states like Kentucky, Arkansas, Mississippi, Alabama, and Indiana boast significantly lower average hidden costs, ranging from $11,559 to $12,259 annually.
Over the past four years, certain states witnessed substantial percentage hikes in hidden homeownership costs, with Utah, Idaho, and Hawaii experiencing increases of 44%, 39%, and 38%, respectively. Conversely, Alaska, Texas, and Louisiana saw more modest percentage rises of 14% to 15% during the same period.
Home maintenance emerges as a particularly expensive yet essential expenditure, often catching homeowners off guard. Researchers estimate that single-family homeowners typically allocate 2% of their home’s value annually to maintenance. Hawaii and California top the charts with the highest maintenance costs at $19,860 and $16,966, respectively, while Iowa and Oklahoma feature the lowest costs, totaling $4,596 and $4,844, respectively.
“Regardless of location, it’s imperative to allocate a buffer in your monthly budget to accommodate unexpected expenses,” advised a Bankrate representative in a press release. “Post-homeownership, it’s crucial to bolster your emergency savings to address unforeseen repairs that may arise.”
