Owning a home doesn’t come cheap these days.
Americans will have to spend nearly $9,400 in “hidden” costs to own and care for a median-priced home, according to a new analysis from real-estate website Zillow and services marketplace Thumbtack.
Necessary costs, including property taxes, utilities and homeowners insurance, add up to more than $6,300 on average. But in some cities these costs can be significantly more. In San Jose, Calif., for instance, homeowners will spend more than $17,000 per year on these required expenses.
Additionally, homeowners will generally spend more than $3,000 on average on home maintenance, such as house cleaning, lawn care and appliance repairs. The cost of labor for these projects varies. Homeowners in Portland, Ore., pay more than $3,800 on average for these services, while their peers in Miami only spend $2,570 on average.
“Ongoing maintenance costs and annual fees are some of the most common surprises for first-time home buyers after they finally become homeowners,” Zillow senior economist Aaron Terrazas wrote in the report. “While they are shopping, buyers tend to focus on their monthly mortgage payments, but other needs quickly add up after move-in. The list price is just the beginning of understanding the costs that come with being a homeowner.”
|Metropolitan area||Total hidden costs of homeownership||Total necessary costs (property taxes, homeowners insurance, utility bills)||Total maintenance costs (cleaning, lawn care, heating and air-conditioning repair, pressure washing, gutter cleaning)|
|Los Angeles-Long Beach-Anaheim, Calif.||$13,892||$10,492||$3,400|
|Dallas-Fort Worth, Texas||$10,712||$7,722||$2,990|
|Miami-Fort Lauderdale, Fla.||$10,173||$7,603||$2,570|
|San Francisco, Calif.||$17,758||$14,358||$3,400|
|Minneapolis-St Paul, Minn.||$10,102||$6,382||$3,720|
|San Diego, Calif.||$14,257||$11,087||$3,170|
|St. Louis, Mo.||$8,712||$6,032||$2,680|
|San Antonio, Texas||$9,171||$6,331||$2,840|
|Kansas City, Mo.||$9,111||$6,301||$2,810|
|San Jose, Calif.||$20,655||$17,255||$3,400|
Hidden costs don’t end when a homeowner decides to sell their home. A previous report from Zillow and Thumbtack found that home sellers will have to spend more than $15,000 in extra or “hidden” costs to off-load a median-priced home.
Additionally, more than 80% of home sellers make some sort of home improvement before listing the house. “For those planning to sell this year, take your time to research all the costs you could be responsible for and how they may affect your profit, or even budget for your next home,” Jeremy Wacksman, Zillow’s chief marketing officer, said in that report.
To produce the report, Zillow calculated transfer taxes with state tax rates and assumed a 6% agent commission, applying those to the median value home in different metropolitan areas. To gauge the cost of home prep, Thumbtack studied tens of thousands of quotes from small businesses around the country and determined an average cost for each expense in the selected cities. The home maintenance projects Thumbtack used for the analysis were carpet cleaning, interior painting, lawn care, home staging and house cleaning.
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And as with other issues in real estate, when it comes to the costs of selling a home location matters. Nationally, sellers spend $12,532 on average in agent commissions and sales taxes. But in an expensive market like San Francisco, sellers pay more than $51,000 for a median-priced home (since these costs are calculated as a percentage of the property value.) For sellers in less pricey markets, such as Indianapolis, these expenses can dip below $9,000.
For home maintenance projects, the cost of labor will similarly vary based on where a home owner lives. Sellers in Los Angeles will pay an average of $4,000 for home improvement projects, while a family in Columbus, Ohio, would only shell out $1,500 for the same work.
So which homeowners can expect to pay the most? It’s bad news for those living on the West Coast.
Metros with the highest hidden costs for selling a home:
- San Francisco: $55,105
- Los Angeles: $40,808
- Seattle: $37,629
- San Diego: $35,629
- Boston: $29,833
- Washington, D.C.: $29,667
- Sacramento, Calif.: $25,197
- Denver: $24,082
- Portland, Ore.: $23,280
- Riverside, Calif.: $21,223
While these hidden costs do cut into the profit homeowners can make from selling — or the amount they can spend on a new home — it doesn’t seem to affect their satisfaction with the home selling process. According to Zillow, 73% of sellers report satisfaction with their transactions.