Home prices are squeezing potential buyers out of the market, and the true cost of homeownership is rising even higher.
The hidden costs of homeownership now total nearly $16,000, climbing faster than incomes, a new analysis from Zillow and Thumbtack found. That’s an additional $1,325 a month on top of the mortgage payment.
According to the report, $10,946 is spent on maintenance, $3,030 is spent on property taxes and $2,003 is spent on homeowner’s insurance. These costs have risen by a combined 4.7% in the past year, while household incomes increased 3.8%.
Insurance premiums are responsible for a bulk of the price jump, soaring 48% nationwide since February 2020.
“Insurance costs are rising nearly twice as fast as homeowner incomes,” said Kara Ng, Zillow senior economist, in a press release Thursday. “It’s not just a budget line item. It’s a barrier to entry for aspiring first-time buyers and for families already stretched thin. Buyers who are already facing affordability challenges in today’s market need to understand and budget for these less obvious expenses when calculating how much home they can truly afford.”
Insurance premiums just top $2,000 on a typical home nationwide, but in Miami, premiums average $4,607 per year, up 72% since 2020. Other Florida metros have been hit similarly, including Jacksonville (72%), Tampa (69%) and Orlando (68%). New Orleans has also seen a spike of 79%.
Total hidden costs are highest in coastal metro areas, such as New York, San Francisco and Boston, where they reach $24,381, $22,781 and $21,320, respectively.
“Home maintenance is often one of the most overlooked parts of owning a home when it comes to budgeting for the year,” said Morgan Olsen, Thumbtack home expert, in the release. “Think of preventative maintenance as a safety net for your biggest asset. Spending a little each season helps spread out costs and keeps your home prepared for whatever the weather brings.”
Home prices are still trending up, increasing 1.7% year over year for a typical single-family home in the third quarter, according to the National Association of Realtors, despite sellers holding little leverage. Price increases kept a similar pace last month, rising 1.3% year over year and 0.4% month over month, a Homes.com report found Thursday.
Home sales are starting to slip as a result, falling 0.3% from a year ago during the four weeks ending Nov. 9, the first decline in four months, a new Redfin report found. Homes that are selling take a median of 49 days to go under contract, the longest span for this time of year since 2019.
