With the decision to leave interest rates unchanged on Wednesday, June 12, 2024, home buying remains prohibitive for many who want to enter the housing market.
However, homeownership costs go way beyond the initial expense of a mortgage and downpayment.
A new study finds that homeowners in the United States spend an average of $18,000 per year on expenses as the price of a home is rapidly rising.
A new Bankrate study found that U.S. homeowners are now paying, on average, a little more than $18,000 a year on expenses related to owning and maintaining a home.
“These are the things that aren’t part of the price of the home,” said bank analyst Jeff Ostrowski. “They’re not part of your monthly principal and interest payment. These are the extras.”
These include utility bills and other expenses, property taxes, and the big ones, according to Bankrate maintenance costs.
These factors add up to higher hidden expenses than just four years ago.
“We looked at inflation overall, was up 21% cumulatively, and the price or the cost of maintaining a home was up 26%according to our estimate,” Ostrowski said.
Ostrowski says the goal of the survey was to raise awareness of these growing costs – particularly among first time homebuyers.
“They’ve been scrimping and saving to get a down payment together, and they finally qualified for the mortgage,” Ostrowski said. “They get to the closing table, and they think, oh, ‘We’re at the finish line,’ but really they’re just at a starting line for another race, which is figuring out how to pay for these ongoing costs of homeownership.”
Jennifer Branchini with the National Association of Realtors says advanced inspections, getting a home warranty, and looking at similar homes and their cost histories are some key pieces of advice to follow.
“So that when they’re looking at their overall budget and preparing an offer that they’re making sure they have those funds set aside for that,” said Branchini.
Branchini also suggests that potential buyers look at insurance rates or the ability to get insured. That’s an issue, and future cost, she says, can catch people off guard.
