The hidden costs of owning a home in the United States have increased by 26% over the past four years, according to a new report.
In March 2024, owners of a median-priced U.S. home worth $436,291 would also need to shell out an additional $1,510 a month or $18,118 annually on top of what they pay for in mortgage.
That is according to a new analysis by Bankrate, which analyzed the average costs of homeownership beyond monthly mortgage payments, including property taxes, homeowners insurance, home maintenance costs, energy bills, internet bills, and cable bills. The analysis did not include other possible hidden costs such as private mortgage insurance, HOA fees, and closing costs, all of which could lead to an even higher expense than the estimates.
In comparison, the same expenses totaled $1,202 per month or $14,428 annually for a typical single-family home in March 2020. At the time, the median price of an existing home was $280,700.
"First-time homebuyers tend to think of closing on a house as reaching a sort of financial finish line. But these numbers show that in important ways, a homeowner's work is just starting. Homeowners bear hefty costs, and first-time buyers especially should be prepared to spend a lot beyond the monthly principal and interest payment," Bankrate Analyst Jeff Ostrowski told USA TODAY.
What Hidden Cost Accounts for the Biggest Share of Homeownership?
Of all hidden costs analyzed, home maintenance accounted for the largest share of homeownership in Bankrate's analysis. Property levies also accounted for a large share of homeownership, especially in states with high property taxes. In other places, however, energy bills came in second.
That being said, Bankrate's totals may be overstated, Ostrowski told Fortune. This is especially true for the owners of newly built homes that do not need repairs or maintenance.
How the Analysis Came up With the Figures
Bankrate's analysis estimated the annual nationwide and statewide home maintenance costs using the 2% rule of thumb, which means budgeting 2% of a home's value per year for repairs and replacements. The analysis also collected 2020 data from the U.S. Energy Information Administration for the average annual national and statewide electric bills.
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