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It's no secret that buying a home has become more expensive in the United States, but the cost of maintaining and maintaining a home has become significantly more expensive as well, which may come as a surprise to some buyers.
The “hidden costs” of homeownership amount to an average of $18,118 per year, or $1,510 per month, according to a new report from Bankrate.com. The national average figure includes costs for property taxes, homeowners insurance, electricity, internet and cable bills. It also includes home maintenance, which is estimated at 2% annually of the home's value.
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The price of such hidden costs inside a typical single-family home in the United States is about 26% higher than it was four years ago, the report found. In 2020, the same expenses amounted to $14,428 per year, or $1,202 per month.
“It's important to understand that you're buying into much more than just your mortgage payment,” said Jeff Ostrovsky, an analyst at Bankrate.com. “You're also buying all these extra costs that you're going to have to figure out how to pay.”
The national average mortgage payment in April was $2,256, up $144, or 6.8%, from a year ago, according to the Mortgage Bankers Association.
Older homes can require more repairs
Of all the expenses used to calculate the national average, maintenance and repair costs often surprise new homeowners the most because of how much repair costs can vary, depending on the age of the home, experts say.
“Because of the building shortage, we know that homes being purchased are older,” said Jessica Lautz, deputy chief economist for the National Association of Realtors.
“Homebuyers have to make compromises along the way, and it often comes down to the age or condition of the home,” she said.
While the supply available on the market is increasing, many of these homes were built decades ago, according to the 2022 American Community Survey conducted by the U.S. Census Bureau. The average age of owner-occupied homes in the United States is about 40 years, the survey found.
A home at this age “may need system upgrades, so consider a new HVAC unit, windows, or doors,” Lautz said.
A roof lasts about 30 years on average, while vinyl siding may last three to four decades, according to Angi.com, an online marketplace that connects homeowners with professional contractors for home maintenance or renovation.
“These are costs that can add up quickly,” Ostrowski said.
For starters, repairs are “part of the learning process.”
First-time homebuyers in particular don't realize the true cost of maintenance and repairs because these expenses are “part of the learning process to become a homeowner,” Ostrowski said.
“Once you've been a homeowner for a while, you realize everything that can go wrong,” he said.
The mistake is to spend your entire savings reserve for a down payment and end up “house poor,” Ostrovsky said.
“Then you move out, and you don't have any money left for repairs and maintenance, so you end up racking up credit card debt or taking on some type of high-interest debt to pay for it,” he said.
In 2023, 46% of homeowners used cash from their savings to cover home improvement projects, according to Angi.com. The site found that about 20% used credit cards, while 7% refinanced an existing loan, and 5% used a line of credit for home equity loans.
Don't waive the home inspection
In the past few years, many homebuyers in the market have waived home inspections, as competition among other buyers has been high, Ostrowski said. In many cases, people who were already homeowners and could make cash offers were more likely to waive the home inspection.
“They're not in the same vulnerable position as a first-time buyer,” or someone who's never been through the process, he said.
Competition is still hot in some areas.
On average, there are three offers for every home for sale, Lautz said.
In April, about 19% of buyers waived a home inspection, down from 22% one month earlier and 21% a year earlier, according to NAR data.
But waiving inspection is risky and not something to take lightly. An inspection is an important safeguard that can help you begin the purchasing process with an understanding of some of the maintenance tasks and repairs that may be on the horizon.
Otherwise, that can be a factor that can inflate ongoing costs after a home closes, Ostrovsky says.
“This certainly increases the risk of someone moving into the home without realizing that (the air conditioner) was about to go out, or that the water heater was on its last legs, or that the roof needed to be replaced,” he said.
