#United States #Seattle #Zillow #homeownership #Thumbtack

New Analysis Reveals Significant Hidden Costs of Homeownership

A comprehensive analysis by Zillow and Thumbtack highlights the often-overlooked hidden costs associated with homeownership, which can amount to an annual average of $15,979 across the United States. As homeownership expenses continue to climb, they are putting additional pressure on household budgets, expanding the gap between income growth and the costs of maintaining a home.

The Breakdown of Annual Homeownership Costs

Within this average figure, substantial portions go towards various necessary expenditures:

• - Maintenance: $10,946
• - Homeowner's Insurance: $2,003
• - Property Taxes: $3,030

Over the past year, these costs have increased by 4.7%, while household incomes saw an increase of only 3.8%. The divergence places stress on potential and current homeowners alike. Particularly in high-cost coastal cities, such as New York City and San Francisco, these hidden costs can exceed $24,000 and $22,000 respectively.

Rising Insurance Premiums

A major contributor to these hidden costs has been a shocking 48% increase in homeowner insurance premiums since February 2020. The average premium now surpasses $2,000 annually, with states like Florida showing even more extreme cases where premiums average around $4,607 a year, marking a 72% increase in just five years.

In response to these statistics, Kara Ng, a senior economist at Zillow, has pointed out that such rising costs significantly deter first-time buyers and families who are already grappling with financial strain.

Tips for Prospective Homebuyers

To navigate these challenges, Zillow and Thumbtack offer several suggestions for prospective homebuyers:

• - Evaluate True Buying Power: Use tools like Zillow's BuyAbilitySM, which allows you to input your desired monthly payment while factoring in hidden costs. Understanding your actual financial landscape is crucial.
• - Prepare for Maintenance Costs: Ahead of closing, home buyers should budget for ongoing maintenance. Thumbtack provides personalized guides to help anticipate these costs efficiently.
• - Consider Home Type: Buyers opting for larger single-family homes should be aware that these often come with higher upkeep expenses. Exploring townhomes or condos may present more affordable maintenance options.
• - Invest in New Construction: While the upfront cost of new homes may be higher, they typically require less immediate maintenance. This can yield long-term savings and peace of mind.

Understanding the Financial Climate

In diving deeper into the financial implications of homeownership, it's vital to note the average hidden costs associated with various metro areas. For instance:

• - In New York City, hidden costs reach $24,381, with $10,838 allocated for property taxes alone.
• - Los Angeles residents face hidden costs of $19,321, while those in Chicago encounter $17,375.
• - Even in seemingly affordable areas like Phoenix, hidden costs, though lower, still amount to $13,419.

The implications of these findings are far-reaching. Home maintenance is an often-overlooked aspect when budgeting for homeownership, leading many to underestimate total financial commitments beyond just mortgage payments.

Morgan Olsen, a home expert at Thumbtack, emphasizes that preventive maintenance is key to preserving the value of a home—treating it as a safeguard for one’s most significant asset.

By addressing these hidden costs and understanding their impact, homebuyers can make more informed decisions, ensuring that their path to homeownership is both sustainable and manageable in the long run.

Conclusion

Owning a home in today’s economic landscape means being prepared for more than just the mortgage. As housing prices and associated expenses continue to escalate, homeowners and future buyers must pay close attention to these hidden costs to ensure sustainable investments in their homes.