With inflation, all aspects of homeownership and the cost of owning a home are gradually going up. The high prices for homeowners insurance, property taxes, and utility bills add thousands of dollars to the home’s cost.
This happens with high real estate prices, increased mortgages, and closing fees.
Cost of Owning a Home
The average yearly cost for insurance, taxes, and utilities for a single-family home in the US is now around $18,118. This is an increase from $14,428 in 2020.
This increase in the cost of owning a home is because of the increasing home values, higher expenses from construction companies, and high homeowners insurance rates because of climate-related natural disasters.
Owning a home is a key part of achieving the American Dream and building wealth, but the cost of owning a home is not limited to the initial purchase. In today’s market, where median home prices go over $400,000, the yearly cost of owning a home and caring for single-family households has increased by 26% compared to four years ago, as per Bankrate’s recent Hidden Costs of Homeownership Study.
When adjusted for inflation, the cost of owning a home is $18,118 yearly for an average single-family home. Nationally, that’s an extra $1,510 monthly on top of mortgage payments.
Prices have increased in the last four years. Home prices have risen by 40% since the pandemic started. In March 2020, the median existing home price was $280,700, but by March 2024, it reached $393,500.
Ostrowski compared the cost of owning a home to buying a used car every year, emphasizing that while homeownership is a key way to build wealth, it comes with a lot of expenses.
Additional Costs of Owning a Home
A Redfin survey in April said that homeowners are struggling with the financial strain of homeownership. This has pushed them to skip meals, take second jobs, or sell belongings to meet mortgage payments.
Meanwhile, the median asking price for homes hit a high of $420,250 in the four weeks ending May 19, according to Redfin, a 6.6% increase from the previous year.
High home prices and nearly 7% mortgage rates have slowed the 2024 home-buying season, leading many to rent instead. Some homeowners are holding off selling to avoid higher mortgage rates on a new property.
According to Bankrate’s survey, homeowners in coastal states like California and Massachusetts face the highest costs, with Hawaii having the most expensive homeownership expenses in the US.
The priciest states for additional costs of owning a home, according to Bankrate, are:
- Hawaii: $29,015 yearly
- California: $28,790 yearly
- Massachusetts: $26,313 yearly
- New Jersey: $25,573 yearly
- Connecticut: $23,515 yearly
The states with the lowest additional costs of owning a home, according to Bankrate, are:
- Kentucky: $11,559
- Arkansas: $11,692
- Mississippi: $11,881
- Alabama: $12,259
- Indiana: $12,259
Bankrate collected data from March 2020 to March 2024 to calculate the average additional costs of owning a home. Some additional costs include property taxes, homeowners insurance, energy bills, internet and cable subscriptions, and home maintenance.
They gathered this information from Redfin, the US Energy Information Administration, the National Association of Insurance Commissioners, and real estate data collector ATTOM.
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