How much does it really cost to own a home?
A study from Self, a company that helps clients build credit, used 2021 and 2022 housing data to determine the real cost of homeownership, including things like closing costs, utilities, maintenance and renovations, private mortgage insurance, moving fees and other costs.
The study found it costs the average American $623,290 to be a homeowner for the average occupancy period of one home (which is just over 13 years). In some states, these costs can be even higher, stretching up to $1,482,229 in Hawaii.
However, considering how the costs of homeownership have significantly escalated in the last couple of years alone, it’s safe to say that Americans are contending with even higher figures today.
“The insurance really is, I think, just as crippling, if not more so, than interest rates,” real estate agent Kara Breithaupt told the WSJl. Breithaupt is based in New Orleans, which is prone to floods and hurricanes, and she’s seen some homeowners resort to selling their properties in order to escape the higher insurance costs.
“When you’re talking about a $500,000 property that has an $8,000 homeowners insurance premium and a $2,000 flood insurance premium, and property taxes on top of that, the carrying costs have exponentially increased,” she said.
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Learn MoreHigher home insurance costs could be the ‘new normal’
The average yearly home insurance cost soared by about 20% within the past two year to $2,377, according to insurance comparison shopping site Insurify, which forecasts another 6% hike in 2024.
The rise has occurred, in part, thanks to a surge of natural disasters like floods, storms and wildfires that tore through the country and even caused some insurance providers to pull out of disaster-prone states.
“Affordability was always a problem — an increasing problem in the last three or four years — but now it’s truly an availability problem,” Michael McCarron, owner of Lakeside Insurance in Arvada, Colorado, told WSJ.
McCarron said many of his clients’ home insurance bills are ballooning by 20% to 40% a year. While price growth could slow down in 2025, he doesn’t expect insurance premiums to return to what they were before the 2021 Marshall Fire, which blazed through neighborhoods between Denver and Boulder.
“This is the new normal,” he said.
Other costs are climbing, too
It’s not just home insurance premiums on the rise — other costs of homeownership are hurtling upwards as well.
One analysis from nationwide property data provider ATTOM uncovered that $363.3 billion in property taxes were levied on single-family homes in 2023, up nearly 7% from 2022 — marking the biggest increase in the past five years.
And a recent report from home-improvement tech company, Thumbtack, said it cost an average of $6,663 a year to maintain a home in the fourth quarter of 2023, an 8.3% jump from the previous year. Thumbtack’s index takes several home maintenance costs into consideration, like lawn care, gutter cleaning and central air conditioning maintenance.
Marco Zappacosta, Thumbtack’s chief executive, told WSJ that supply-chain issues and a surge in demand for renovations caused maintenance costs to swell during the COVID-19 pandemic — and demand is still outpacing supply.
“There aren’t enough professionals to serve all these homeowners,” Zappacosta said. “It doesn’t seem like that is going to abate in the near term.”
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