Hidden costs of homeownership can add up to nearly $15,000 annually

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Jun 01, 2023, 08:00 ET

New Zillow and Thumbtack analysis identifies the additional costs home buyers can expect, including utilities, insurance, maintenance and property tax

Homeowners can expect to pay $14,155 a year, or $1,180 a month, in hidden costs related to owning a home.
These annual costs can be as high as $22,791 in the San Francisco metro area and as low as $9,886 in Las Vegas.
Affordability is the No. 1 challenge for first-time home buyers. Zillow's affordability calculator and new search by monthly cost tool, along with Thumbtack's personalized maintenance guides, can help buyers incorporate these costs into their budget.

SEATTLE and SAN FRANCISCO, June 1, 2023 /PRNewswire/ -- The everyday expenses of owning a home are higher than ever, according to a new analysis from Zillow® and Thumbtack. Utility bills, property taxes, insurance and essential home maintenance can add up to $14,155 a year for the average U.S. homeowner. That's an additional $1,180 per month on top of a typical mortgage payment. First-time home buyers facing affordability challenges in today's market need to understand and budget for these less obvious expenses when calculating how much home they can afford.

Zillow and Thumbtack: Top 10 metros with the highest hidden annual costs of homeownership

These costs can be surprisingly high in already pricey metro areas, topping $22,000 annually in San Francisco, New York and Los Angeles. Of the 39 metro areas analyzed, hidden homeownership costs are the lowest in Las Vegas ($9,886); Asheville, North Carolina ($11,318); and St. Louis ($11,824).

Zillow and Thumbtack's research looked at three unavoidable expenses for single-family homeowners — property taxes, homeowners insurance and utility payments (energy, water, natural gas and internet) — and found they averaged $7,742 in total nationally. New Yorkers pay the highest property taxes, topping $9,000 per year, while utilities cost the most in Hartford, Connecticut, averaging $4,443 a year. Costs for homeowners insurance vary based on home value, so homeowners in the most affordable metro areas, such as Pittsburgh and Cleveland, have the added benefit of lower insurance bills.

The analysis also considered Thumbtack's 17 essential home maintenance projects, based on data from millions of home projects completed across the country. These projects average a combined $6,413 annually. The average cost of upkeep is highest in Los Angeles and Chicago, totaling $8,639 and $7,722 respectively. Meanwhile, homeowners in Las Vegas can expect to pay just $3,467 per year to maintain their homes.

"Just like you would visit a mechanic for regular tune-ups to help keep your car in good condition and avoid big bills, your home needs the same routine maintenance to ensure that everything is running smoothly," said David Steckel, Thumbtack's home expert. "Staying on top of annual home maintenance will not only increase the value of your home, but will also help prevent emergency repairs that can wreck a homeowner's budget."

First-time buyers make up nearly half of all home shoppers (45%), and they may be caught off guard by these costs and fail to account for them when budgeting for a home. By starting with the Home Loans tab on Zillow's homepage, shoppers can use an affordability calculator to figure out how much they can afford and then connect with a loan officer to establish not only what mortgage they qualify for, but what they're comfortable paying, given these additional costs. With that budget in hand, buyers can then use a new app filter on Zillow to shop for homes by monthly cost, instead of by purchase price.

"Understanding all the costs that come with homeownership can not only impact a buyer's budget, but the type of home they shop for, too," said Zillow home trends expert Amanda Pendleton. "While a big backyard or a larger home may be appealing, it's important to consider how much maintaining those spaces could cost. Buyers may want to consider affordable alternatives to single-family homes, or spend more upfront on a new-construction home that could need less maintenance in the near term."

Once buyers have closed the deal, Thumbtack is the go-to partner to help care for your new home. By entering their home's location and features on Thumbtack, homeowners can receive personalized guidance on what projects to complete, when to complete them and who to hire to get the job done. This will help homeowners create prioritized maintenance plans that are within their budget to cover everything from the move-in house cleaning to tree trimming and roof maintenance.

Methodology

In this analysis, property taxes were calculated using the median effective tax rate in each metro area multiplied by the area's median home value as measured by the Zillow Home Value Index.

In estimating insurance costs, this analysis assumed homeowners pay 0.5% of their home's value every year, which was calculated as 0.005 multiplied by the area's median home value as measured by the Zillow Home Value Index.

Utility costs were calculated using the unweighted average across all states, excluding streaming and phone bill costs, as reported by Forbes.

The annual costs of home maintenance consist of Thumbtack categories that are deemed essential annual tasks for home maintenance: appliance maintenance, carpet cleaning, central air conditioning maintenance, deck staining and sealing, duct and vent cleaning, fireplace and chimney cleaning, full-service lawn care, gutter cleaning and maintenance, heating system maintenance, house cleaning, pressure washing, roof maintenance, sprinkler and irrigation system maintenance, tile and grout cleaning, tree trimming and removal, water heater maintenance and window cleaning.

Pricing data is based on projects requested on Thumbtack reported directly by the independent service professional or individual customer. The cost is an unweighted index of all yearly home maintenance projects and is calculated on a quarterly basis using a moving average.

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z) (NASDAQ: ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting, or financing with transparency and ease.

Zillow Group's affiliates, brands and subsidiaries include Zillow®; Zillow Premier Agent®; Zillow Home Loans™; Zillow Closing Services™; Trulia®; Out East®; StreetEasy®; HotPads®; and ShowingTime+℠ , which houses ShowingTime®, Bridge Interactive®, and dotloop® and interactive floor plans. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

About Thumbtack

Thumbtack is a technology leader building the modern home management platform. Through the Thumbtack app, homeowners can effortlessly manage their homes — confidently knowing what to do, when to do it, and who to hire. Bringing the $600 billion home services industry online, Thumbtack empowers millions of homeowners to fix, maintain, and improve their most valuable asset. Hundreds of thousands of local service professionals, from painters and plumbers to photographers and electricians, use the Thumbtack platform to grow their business each year.

SOURCE Zillow Group, Inc.