The hidden costs of homeownership average $18,000 per year

It’s no secret that the cost of buying a home in the United States is rising, but the costs of maintaining and maintaining a home have also risen significantly, which may come as a surprise to some buyers.

According to a new report from Bankrate.com, the “hidden costs” of homeownership average $18,118 per year, or $1,510 per month. The national average figure includes property taxes, homeowner’s insurance, electricity, internet and cable bills. It also includes home maintenance costs, which are estimated at 2% of the home’s value per year.

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The report found that these hidden costs for a typical US single-family home are up about 26% from four years ago. In 2020, those same expenses amounted to $14,428 per year, or $1,202 per month.

“It’s important to understand that you’re buying into more than just your mortgage payment,” says Jeff Ostrowski, an analyst at Bankrate.com, “and all the additional expenses that you’re going to have to figure out how to pay for.”

The national average mortgage payment was $2,256 in April, up $144, or 6.8 percent, from a year ago, according to the Mortgage Bankers Association.

Of all the costs used to calculate the national average, experts say maintenance and repair costs often surprise new homeowners because repair costs vary widely depending on the age of the home.

“We’re finding that because of the lack of construction, the homes being purchased are older,” said Jessica Lautz, deputy chief economist at the National Association of Realtors.

“Homebuyers have to make compromises along the way, and it’s often about the age and condition of the home,” she said.

While the supply of homes on the market is increasing, much of it was built decades ago, according to the U.S. Census Bureau’s 2022 American Community Survey. The survey found that the average age of homes occupied by U.S. homeowners is about 40 years old.

A home that old may need an upgrade to your system, so consider a new HVAC system. [heating, ventilation, and air conditioning] “A unit, a window or a door,” Lautz said.

According to Angi.com, an online marketplace that connects homeowners with professional contractors for home maintenance and renovation, the average lifespan of a roof is about 30 years, while vinyl siding can last 30 to 40 years.

“These are the kinds of costs that can add up really quickly,” Ostrowski said.

First-time homebuyers, especially, don’t understand the true costs of maintenance and repairs because those expenses are “part of the learning process of becoming a homeowner,” Ostrosky said.

“When you’ve owned a home for a while, you start to understand what the issues are,” he said.

But Ostrovsky says it’s a mistake to use all of your savings towards a down payment and end up “house poor.”

“Then when they move in, they barely have any money left for repairs and maintenance, so they end up taking out credit card debt or some kind of high-interest debt to pay for it,” he said.

According to Angi.com, 46% of homeowners used cash from savings for a home improvement project in 2023. The site found that about 20% used a credit card, 7% refinanced an existing loan, and 5% used a home equity line of credit loan.

In the past few years, Ostrovsky said, many home buyers who were in the market forego home inspections because of the increased competition among other buyers. In many cases, those who already owned a home and could pay cash were more likely to forego the home inspection.

“They’re not in the same vulnerable position as a first-time home buyer or someone who’s never been through the process,” he said.

Competition remains fierce in some areas.

On average, there are three applications for every home that is listed for sale, Lautz said.

About 19% of buyers waived home inspections in April, down from 22% a month earlier and 21% a year ago, according to NAR data.

However, forgoing an inspection can be dangerous and is not something to be done lightly. An inspection is an important safeguard that helps you understand any maintenance work or repairs that may be required in the future before you buy.

Otherwise, it could lead to inflated ongoing costs after the homebuying process closes, Ostrovsky said.

“It’s definitely someone moving into the house. [air conditioning] “The house was falling apart, the water heater was at the end of its life, the roof needed replacing,” he said.