The Real Cost of Home Ownership

Owning a home is not for the faint of heart. The real costs of homeownership are often hidden and spring up when you least expect them. Property taxes, Homeowners’ Association (HOA) fees, and even routine utility costs are a few of the obvious costs to be anticipated. However, what lies behind that gorgeous exterior and the extra amenities you fell in love with is a veritable ‘money pit’. Homeowners, who never imagined (or calculated) the real cost of home ownership, are left with piles of bills and more stress than they ever could have imagined. The question that begs to be answered, “Is home ownership worth it?”

Cost of HomeOwnership

Fixed Homeowner Expenses

In addition to the down payment on your home, there are some fixed expenses that every homeowner will incur. While these aren’t exactly hidden costs, they can come as a surprise if a new homeowner does not know about and consider these costs of homeownership in advance. According to the real estate marketplace Zillow, “The typical U.S. homeowner pays $2,110 per year in property taxes, $2,953 in utility costs and $996 in insurance costs – all unavoidable expenses associated with homeownership.”

Property Taxes

Calculated according to the value of your home and the city where you live, property taxes are an annual expense that will never go away. In fact, they’ll increase over time especially if you add-on additional structures to your property such as a swimming pool or deck. Property Tax rates can range anywhere from .1% to a full 2% of your home’s assessed value.  

Home Owners Insurance

Homeowners insurance is a type of insurance that covers both interior and exterior damage, personal injury and loss or damage of assets. While it’s not mandatory, it is a must-have for responsible homeowners who would otherwise have to pay astronomical costs if something unexpected happens. Unfortunately, homeowner’s insurance doesn’t cover “acts of God” which are typically weather events like hurricanes or flooding. In many cases, and depending on where your house is situated, you’ll need additional insurance coverage if your area is prone to natural disasters.  

Utilities

You might have been able to fit your utility bills nicely on your budget back when you were living in a tiny cramped apartment, especially if your landlord was footing the water and garbage removal bill. However, as a homeowner, all utility bills rest squarely on your shoulders. Unlike your small dwelling space, which only costs a couple of hundred bucks a month in utilities, your spacious new multi-level home with cathedral ceilings could set you back a thousand dollars or more a month in utilities.  There are lots of great ways to reduce your utilities cost through regular home maintenance. Even something as simple as regularly changing your furnace filter can have an impact.  

Discretionary Homeowner Expenses

There are countless additional expenses that arise when owning a home such as installing a security camera system, landscaping, sewer and water lines, and many more.  Each of these can make being a homeowner feel like a life sentence with no option for parole. Many homeowners experience problems with the house after purchase. The hidden expenses of home ownership can put a financial strain on the family, cause intense stress and even put a burden on a marriage. Worst of all, many homeowners can fall behind on mortgage payments and the threat of foreclosure becomes a real possibility.  

Yard Maintenance

That beautifully manicured lawn you swooned over, during the first visit to your then-potential home, is actually a gnarly beast that’ll take a lot of your hard earned cash to tame.
  • Lawn Care

    The grass isn’t always greener on the other side! Maintaining a lawn is something that many homeowners never even considered until after moving into their home. Watering the lawn, fertilizing the soil and mowing the grass all cost both time and money. If you have an HOA, you may also face potential fines if you fall short on lawn maintenance.
  • Landscaping

    Trimming the shrubs, planting flowers and laying mulch are just some of the tasks a professional landscaperds undertakes. Based on your acreage and the way you want to develop the property, landscaping fees can take a big bite out of your income. While DIY landscaping is an option, the cost of materials and tools will still take a toll.
  • Tree Care

    Trees are much more than simply ornamental features in your yard. Depending on the age and size, trees pose a potential safety hazard around the home. High winds, rain saturated ground, and natural disasters are all factors that can cause trees to topple unexpectedly which could result in damage to your house or even loss of life. Routine tree evaluations are necessary and add to the cost of owning a home.

Home Decor

You finally closed on your ‘dream home’! Are you going to fill it with the second-hand furniture you bought for your tiny post-college apartment? The most favorite task on a homeowner’s “to-do” list is to custom tailor their new home to represent their individual style, taste, and even philosophy.
  • New Furniture

    There is nothing quite like new furniture to make a house feel like a “home”. However, shopping for furniture can set you back tens of thousands of dollars depending on where you shop. Even discount furniture chains are pricey. And in most cases, unfortunately, the quality doesn’t match the price. So you can look forward to replacing high traffic pieces of furniture every couple of years.
  • Accent Pieces

    Rugs and textiles and mirrors, oh my! Unique accent pieces add color and depths of character to define your space. Most will also set you back a pretty penny. Thanks to home design channels like HGTV, remarkable accent pieces are in high demand and that drives hefty price tags. Most homeowners fall deeply into debt trying to add their own personal touches to their new home.
  • Artwork

    It comes in all styles, shapes and sizes. Quality artwork makes a great focal point in shared living spaces and is a wonderful conversation starter during dinner parties with friends and family. Available in a range of genres, from contemporary to art deco, artwork is an extravagant expense that many homeowners cannot afford. Yet, many are willing to go into debt to have it.
 

General Maintenance for Wear and Tear

Over time, the plush carpeting in the living room or even the reclaimed wood cabinets in the kitchen will lose their luster as overuse and age begin to show. In five years or less, new homeowners often grapple with restoring the most used areas of the home.
  • Carpet Replacement

    Carpeting adds color and a certain sense of luxury to a home. It is one of the most-used components of the home and has to withstand everything from accidental spills to the pitter-patter of little feet and even the rigors a family pet can inflict on its’ surface. The carpeting in your home is very high-maintenance. It has to be shampooed regularly and , ultimately, replaced in a few years. With the average cost to re-carpet a home standing at almost $1600, it is a hidden cost that many homeowners overlook.
  • Kitchen Cabinet Makeovers

    The kitchen cabinets in your new home can make or break the space. Often times, the kitchen cabinets are one of the most dated parts of the home and are not necessarily functional for modern living. If you are handy with DIY home repairs, you can choose to either paint or refinish your existing kitchen cabinets. Otherwise, replacing the kitchen cabinets entirely will run between $2000-$4000.
  • Flooring Restorations

    Just like carpeting, vinyl flooring takes a beating during its’ lifetime. Chemical stains, cracking and yellowing are just a few of the issues that can affect the overall appearance of this type of flooring. Restoring your kitchen, or even bathroom, floor with a total vinyl tile replacement starts at $1,000 and increases based on room size. If you choose a different material, such as ceramic tiles, the cost of materials and labor go way up.

DIY Projects and Repairs

Since most homeowners have a mortgage to pay, and an abundance of hidden costs, DIY projects, and repairs require both time and money to do properly. Cutting corners is a risk for homeowners, who may want to sell their home at a later date. Therefore, an immense amount of time must be spent on self-education through books or YouTube videos, project management and the actual purchase of the correct supplies to complete each task or project to fruition. And let’s not forget all of the time necessary to execute each of the steps necessary to complete each project or repair.  

Natural Disasters

Depending upon where you live, natural disasters are a viable concern for homeowners. With most home insurance companies refusing to cover “acts of God”, homeowners are left holding the bag when a natural disaster strikes.
  • Floods

    Flooding can occur when you least expect it and most homeowner’s insurance policies don’t cover it. If your home is situated in a low lying area, flooding can be a common occurrence that will affect it in the long-term. It may also dissuade potential buyers from purchasing your home in the event you decide to put it on the market. It’s impossible to put a price range on flood damage, as it can be widespread and extensive.
  • Winter Weather

    There’s a reason why new home sales take a drastic dip in the winter. The gloomy weather and shorter hours of daylight don’t do much to increase the curb appeal of a property. As a result, most new homeowners have no idea how their homes will fair in the winter months. That is until it is possibly too late. Frozen pipes that burst and leak when thawed, roof damage from the weight of heavy snow and fallen tree branches are just a few of the winter woes that can affect homeowners. The hidden cost here is that while most homeowner’s insurance companies do cover winter storm damage, many will deny a claim if it can be proven that a homeowner was negligent and ignored opportunities to take preventative measures to lessen (or completely negate) the effects of winter weather.
  • Other Catastrophes

    Tornadoes, earthquakes, hurricanes and forest fires are some of the most common catastrophes in North America. Early warning systems and weather alerts can give homeowners enough lead time to take the necessary precautions to protect their homes, lives, and property. However, the hidden expense lies in the cost of disaster prevention supplies and the materials needed to safeguard the house as well as potential clean-up efforts.  
 

Seasonal Maintenance

As the old adage goes, “time is money.” No truer words have ever been spoken, especially when it comes to homeownership. The time that homeowners spend to maintain and repair their home is a substantial commitment that lasts a lifetime.
  • Winterizing

    Getting your home ready for the harsh months of winter requires a great deal of time and money. Installing storm windows, sealing cracks in walls and remedying drafty doors are just a few items on a very long list of home winterizing tasks. While hiring an expert is always an option, the hidden costs will add up fast and put a dent in your home budget. Most importantly, your spare time is more valuable than money and winterizing your home will command a sizeable chunk of it.
  • Spring Cleaning

    If you thought winterizing your home was a monumental task, then you might be surprised to learn that spring cleaning is a more colossal beast that comes with its own set of challenges. Removing all of the winterizing measures you put in place is only the beginning. Cleaning up decaying foliage and debris, power washing the exterior to remove mold and even spring planting are just some of the tasks that will take more than just one weekend’s worth of your time to complete.
 

Pest Control

Pests fly, creep, crawl or slither and will do their utmost to make their presence known. Homeowners must be proactive in dealing with pest control as ignoring it could have disastrous consequences. Since most home insurance companies do not cover pest control, the onus lies with the homeowner.
  • Interior pests

    The most common interior pests are ants, cockroaches, and mice. Usually attracted by something in the home, such as food or clutter, these three pests can multiply fast if given the opportunity. Preventative measures to repel these pests are costly and professional pest control removal, once the situation has grown unmanageable, can cost hundreds of dollars.
  • Exterior pests

    Wasps, mosquitoes, and spiders are just a few of the pests found lurking outside of a house or even beneath the foundation. All three of these pests are more than just annoying and can pose severe health risks to human beings. Hiring an exterminator to identify, track and terminate the source of the pests will cost a homeowner between $100- $170.

Problem Neighbors

It’s hard to get to know anyone until you either live with them or next door to them! Neighbor disputes date back centuries and can occur for a wide variety of reasons.
  • Property Boundary Lines

    An estimated 17% of problems with neighbors have to do with disputes regarding property boundary lines. Arguments over who has to mow which side of the lawn, or shovel the sidewalk in winter and other issues pertaining to the adjacent space can take both a mental and unexpected financial toll to resolve.
  • Pet Problems

    A surprising 29% of all neighbor complaints are centered around our furry friends. Disregard for the pet policy, aggressive animals and noise levels are just a few of the issues that arise between neighbors. The hidden cost is two-fold. Anxiety and stress from dealing with pet complaints can be exasperating, to say the least. And if you’re a pet owner, complaints about your pet can result in fines or other costs especially if your pet is deemed to be a nuisance by your HOA or another 3rd party.
  • Noise Issues

    Noise tops the list of disputes between neighbors with a whopping 48% of problems being rooted in issues like noisy children, loud parties and home construction. Disputes over noise present a deep challenge for homeowners, the effects of which can pit neighbor against neighbor and possibly escalate to physical altercations. The mental and potential financial costs are incalculable. (Above stats of the Problem Neighbors section are courtesy of IKO Community Management)
 

Benefits of Homeownership

Just as there are many costs to home ownership, there are also varied benefits to becoming a homeowner. Building up equity, for example, is an advantageous benefit to owning a home. With equity, you can borrow against it to cover larger expenses such as college tuition. Other hidden benefits include tax deductions and strengthening your credit history. However, the most important benefit is that you can have the home of your dreams without the influence or interference of a 3rd party, such as a landlord. Having the freedom to ‘call the shots’ and transform a house into your dream home is worth its weight in gold. As the saying goes, “ A house is made of bricks and beams. A home is made of hopes and dreams.” Click here to read about the 7 most overlooked Home Maintenance tasks.

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