Buzz
The unexpected costs of purchasing a home aren’t exactly hidden—they're just tough to forecast when you're in the midst of house hunting.
Spectora, a home inspection software company, examined homeownership expenses through the American Housing Survey, a biennial survey conducted by the Department of Housing and Urban Development and the Census Bureau.
The company highlighted significant hidden costs of owning a home in major metropolitan areas, drawing from the survey's responses from over 45,000 housing units. While the AHS covers all housing types (e.g., apartments, houses), some costs are unique to homeowners.
Here are some monthly median expenses you should keep an eye on:
Utilities
National median: $361 monthly; Highest median: Boston, $439 monthly; Lowest median: San Francisco, $246 monthly
Utilities encompass water, gas, electricity, fuel oil, renewable sources (solar, wind), and trash collection. It's no shock that heating a home in cold places like Boston or New York can be pricey, but other utility costs aren’t as apparent. Cities such as Miami, Dallas, and Phoenix have higher trash collection fees.
If you're looking to understand utility costs outside of major metro areas, Bankrate’s cost of living calculator is an excellent resource for exploring various expenses.
Homeowner association fees
National median: $62 monthly; Highest median: New York City, $358 monthly; Lowest median: Detroit, $25 monthly
If you're thinking about buying a property in a community with a homeowner association, it's worth noting that these median figures represent the midpoint of reported fees. These fees are not tax deductible, though some lawmakers have attempted to change that.
Property taxes
National median: $200 monthly; Highest median: New York City, $600 monthly; Lowest median: Atlanta, $150 monthly
This is one area where cutting costs is unlikely unless you're thinking about relocating to a different city.
Home insurance premiums
National median: $67 monthly; Highest median: Miami, $119 monthly; Lowest median: Phoenix, $58 monthly
If you're purchasing a home, you'll need to set aside money to cover the insurance. Unfortunately, Miami’s status in the hurricane zone makes it tough on homeowners.
Spectora included driving costs to calculate a total median monthly cost for 'hidden' homeownership expenses. I don’t agree with including driving costs, as driving isn’t exclusive to homeowners. If you're buying a home in the same metro area where you currently rent, your transportation costs are likely to remain similar.
You might think, 'But I rent and I pay utilities! Homeownership is overrated!' and I get it, but the utilities you’re responsible for while renting can vary so much. In contrast, with homeownership, you’re fully responsible for all those utility costs.
If the national median for extra homeownership costs is $875 a month according to this report, you can use that number as a baseline when planning your budget beyond the mortgage. If you’re buying in a pricier area, make sure to plan accordingly.
This isn’t a complete guide to hidden costs. Routine maintenance. Surprise plumbing fixes. Maybe a garden. And suddenly, you've got 17 windows needing coverings.
If you're starting to tighten up your budget in preparation for your post-closing costs, these figures can give you a better idea of what you might encounter in your region.
