Another Hurdle to Homeownership — $18K Average Extra Costs

Buy a house, face a first repair, and then start counting the people who will sagely nod and talk about all the extra costs homeowners face.

Owners also see building equity and personal wealth, but the cliché advice has a point. Like closing costs, the combination of property taxes, homeowners insurance, home maintenance costs, and others take a financial toll. Bankrate published a study looking at the costs of owning and maintaining a home. The average is more than $18,000 a year.

“In a market where median home prices have climbed above $400,000 nationally, the average annual cost of owning and maintaining a single-family home in the U.S. is 26 percent higher now compared to four years ago, according to Bankrate’s new Hidden Costs of Homeownership Study,” the company wrote.

Bankrate started with the property taxes, homeowners insurance, and home maintenance costs, estimating them annually at 2% of the home’s value. “We also included energy, internet and cable bills and adjusted figures for property taxes, energy, internet and cable bills and homeowners insurance premiums for inflation.”

Looking at a typical $436,291 single-family home, the total was $18,118 a year across all 50 states. That is an additional monthly nut of $1,510 on top of the mortgage. In 2020, the extra expenses were $14,428, or $1,202 a month. Over the last four years, that’s an increase of 25.6%.

That’s the average. Here are the five states with the highest extra costs:

Hawaii — The annual additional costs are $29,015. The typical single-family home costs $993,000. Maintenance is $19,860. Property taxes are $3,724, insurance runs $1,455, cable and internet are $1,508, and energy is $2,468.

California — The Golden State is pricey, with median home prices of $848,300, so the 2% maintenance costs are $16,966. Property taxes of $6,832, insurance of $1,572 (if you can get it, with the number of carriers pulling out of the state), cable an internet expense of $1,434, and energy bills of $1,986 round out the additional $28,790.

Massachusetts — The additional annual costs are $26,313, with property taxes of $7,413, maintenance of $12,484, $1,918 in insurance, $1,557 for cable and internet, and $2,941 for energy costs.

New Jersey — Expect an average of $25,573 in costs comprising $10,027 in taxes (highest in the nation), maintenance of $10,048, $1,466 in insurance, cable and internet access of $1,594, and $2,439 in energy.

Connecticut — Taxes are about $8,073 a year, $8,718 maintenance, cable and internet of $1,508, insurance of $1,850, and energy costs of $3,367. That all comes to $23,515 in extra costs.

The least expensive states are Kentucky ($11,559), Arkansas ($11,692), Mississippi ($11,881), Alabama ($12,258), and Indiana ($12,259).