Tuesday, June 18, 2024

Buying a home? Expect to pay $18,000 a year in additional costs


Soaring prices for homeowners insurance, property taxes and utility bills are adding thousands of dollars to the cost of owning a home. The increases come at a time of record-high real estate prices and elevated mortgages and closing fees.

The average annual cost of insurance, taxes and utilities for a single-family home in the U.S. is currently about $18,118, according to an analysis from Bankrate. That’s up from $14,428 in 2020, the personal finance website said. Those costs are rising for several reasons, including rising home values, rising costs from construction companies hired to build properties, and rising homeowners insurance rates as a result of climate-related natural disasters, Bankrate said. 

“These numbers show that the costs of owning a home are at the same level as buying a used car every year,” Bankrate analyst Jeff Ostrowski said in a statement Monday. “Homeownership is an important wealth-builder for many Americans, but it ain’t cheap,” he added. 

Homeownership is becoming such a financial burden that an April survey from Redfin found that some homeowners have had to skip meals, take a second job or sell their belongings to keep up with their mortgage. The nation’s median asking price on a home — what sellers hope their property goes for — reached a record $420,250 during the four weeks ending May 19, a 6.6% rise from a year ago, according to Redfin. 

Record-high home prices and mortgage rates nearing 7% have put a damper on the 2024 home-buying season so far, with many buyers opting to remain renters. Elevated mortgage rates have also caused some homeowners to refrain from placing their property on the market because they would then face paying higher mortgage rates on another property.  

Prices not likely to fall

With both home prices and interest rates climbing, some buyers might be tempted to wait until those numbers drop. But as “[home] prices are unlikely to go down this summer,” there’s little to no benefit in waiting, Holden Lewis, mortgages spokesperson at NerdWallet, told CBS News. 


Tips for buying a home as mortgage rates climb

04:06

Homeowners in coastal states like California and Massachusetts are paying the highest costs, along with Hawaii, which has the most expensive home ownership costs in the country, according to Bankrate’s survey. 

The most expensive states for hidden housing costs, according to Bankrate, are:

  • Hawaii pay $29,015 a year
  • California pay $28,790 a year
  • Massachusetts pay $26,313 a year 
  • New Jersey pay $25,573 a year
  • Connecticut pay $23,515 a year

The states with the lowest amount of additional homeownership costs, according to Bankrate, are:

  • Kentucky at $11,559
  • Arkansas at $11,692
  • Mississippi at $11,881
  • Alabama at $12,259
  • Indiana at $12,259

Bankrate reached its findings by totaling the average price of property taxes, homeowners insurance, energy bills, internet and cable subscriptions and home maintenance jobs between March 2020 and March 2024. Bankrate researchers obtained raw data for those costs from Redfin, the U.S. Energy Information Administration, the National Association of Insurance Commissioners and real estate data collector ATTOM. 



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