2021 proved to be a strong year for home sales, thanks to high buyer demand and low borrowing rates. There were 6.1 million existing-home sales in the United States last year, a 15-year high. Year on year, that represented an 8.5% increase from 2020.
Homeownership is often seen as a key component of the “American Dream” and there are a host of benefits from swapping a rental property for one of your own. Outside of the upfront sale price, there are other costs of owning a home, something that many people overlook.
In this blog post, we will highlight the many costs of owning a home. These include property taxes, homeowners insurance, roof maintenance, landscaping and lawn care, plumbing maintenance, and much more. Let’s get started.
Homeowners are required to pay property taxes. The specific amount payable will depend on the state and locality in which the property is located.
The effective average rate nationwide is 1.1% of a property’s assessed value, though this varies widely. For example, the average in New Jersey is 2.13%, while in Hawaii it’s less than 0.4%. Homes in the north-east of the country typically impose a higher property tax than in the south and west.
A number of states offer exemptions and individual credits to qualified homeowners, which can reduce the effective property tax rate.
Homeowners’ Association Fees
Many residences will also be required to pay a homeowners’ association or a condominium association fee. This fee is paid either monthly, quarterly, or annually.
The fees paid here cover the cost of various services, such as snow plowing and garbage collection. From time to time, a special assessment may be charged for more expensive projects, such as revamping common areas and revamping the parking lot.
Not every residence will have a homeowners’ association and so this fee may not be applicable.
There are a number of benefits of homeowners insurance. These include:
- Protection of your property
- Protection of detached structures (such as garages and sheds)
- Coverage of your property’s contents
- Liability coverage
- Loss of use insurance
Premiums for this insurance can rise on an annual basis or if the coverage is increased to reflect the rising value of property contents or the property itself.
Homeowners insurance typically does not cover disasters like earthquakes, hurricanes, and floods. Additional coverage should be purchased for these. Check out Better Flood to learn more about flood insurance in Colorado.
Landscaping and Lawn Care
While many Americans have a love of gardening, oftentimes there simply aren’t enough hours in the day to look after every detail of a property’s exterior space. That’s why you may consider hiring a professional to keep your landscaping in check.
Even if you do decide to do this yourself, there are costs associated. Lawnmowers, leaf blowers, and snowblowers may be necessary purchases.
Maintaining your garden isn’t just a cosmetic issue. Overhanging branches can fall and damages windows and roofs, while overgrown plants and shrubs can impact gutters and outdoor HVAC systems. Properly maintaining your garden may be a requirement within your homeowners’ association agreement.
Roofs are often overlooked by homeowners—that is, until something goes wrong and repairs are required. Signs that your roof requires repairs include:
- Missing or broken shingles
- Lots of shingle granules in gutters
- Damaged flashing
It is recommended that you schedule routine roof inspections to avoid the need for extensive and expensive repairs down the line. Depending on the roofing material used, the lifespan of a roof is between 15 to 200-plus years.
An asphalt shingle roof has an average lifespan of 15 to 30 years. A complete roof replacement costs several thousand dollars.
HVAC System Maintenance
Heating, ventilation, and air conditioning systems are essential features of modern homes. They provide both cooling and heating in one convenient system.
A full HVAC system replacement can cost between $7,000 and $10,000, with an average lifespan between 10 and 20 years. Routine maintenance is recommended to keep your system working in top condition and repairs may be required from time to time.
Many small plumbing issues can be resolved with some knowledge and a DIY spirit, such as clogged drains. However, larger issues will require professional assistance. Common plumbing issues include:
- Leaking taps
- Boiler breakdowns
- Radiator issues
- No hot water
- Water cylinder issues
- Block toilet
- Gas line issues
From time to time, pipes will require replacement. It is always better to pay for professional assistance rather than attempting DIY repairs if you aren’t confident, as you may end up making the issue worse.
Electrical System Maintenance
Another critical element of any property is the electrical system. Whether you have an electrical issue within your property or are planning rehab work, it’s essential that you hire professional electricians. They are trained and licensed and will be able to oversee any work safely according to current codes.
Understanding the Many Costs of Owning a Home
The cost of homeownership encompasses a number of different expenses, as this blog post has highlighted. These homeownership expenses should always be factored in when planning to purchase a new property and deciding on a budget.
In terms of maintenance, it is always advised that you stay on top of systems such as HVAC, electrical, and plumbing. That way, you can avoid having to pay more for unexpected repairs down the line.
Like this blog post on the costs of owning a home? Be sure to check out our other informative articles on a wide range of interesting topics.