U.S. homeowner pays more than $9,000 a year in hidden costs—some unavoidable and others optional—that are often overlooked during financial planning.
Home ownership, as with a college education, is part of achieving the American Dream and one of the biggest investments a household will make. As with a college education, first-time homebuyers focused only on sticker price when determining how much they can afford are in for a rude awakening, according to a new Zillow and Thumbtack report that finds the U.S. homeowner pays more than $9,000 a year in hidden costs—some unavoidable and others optional—that are often overlooked during financial planning.
Most prospective home buyers will calculate their monthly mortgage payment. “But if you’re only calculating principal and interest, then you could be underestimating the actual cost of homeownership,” the report cautions. There are also property taxes and homeowners insurance to consider, not to mention a likely increase in utilities.
Home maintenance is another overlooked common and unavoidable expense. It is advised to research how projects such as housecleaning, pressure washing, yard care, carpet cleaning and gutter cleaning cost in your area. Owners could pay on average $3,435 for these projects. Do-it-yourselfers should also be sure to budget for lawnmowers and other tools and equipment.
Location, location, location is the realtors’ mantra, and this, too, is a factor in determining unanticipated costs. For example, median home values in Phoenix and Philadelphia are fairly comparable at $201,800 and $200,500, respectively, the report notes. However, buyers in Philadelphia could spend an additional $3,648 every year to cover the same hidden, unavoidable costs as a homeowner in Phoenix, and an extra $755 per year in maintenance costs.
In Boston, combined hidden costs and maintenance expenses can nearly reach $14,000. In San Francisco, they top $13,000, in Chicago, $12,000 and Seattle, $11,549. Phoenix comes in under the $9,000 average at $7,550 in extra home costs.
Homebuyers too often fixate on the sticker price or monthly mortgage payment on a house, and don’t budget for the other expenses associated with ownership — which can add up quickly,” Amy Bohutinsky, Zillow chief marketing officer, said in a statement. “"For example, new buyers can get really excited about having a backyard of their own for the first time, without budgeting for how they plan to maintain that space."
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.