June 30, 2015

Yearly home expenses can bite owners

Zillow and Thumbtack analysis reveals hidden costs to homeowners

by Erik Pisor erik@inman.com Jun 17, 2015

Homeowners on average pay more than $9,000 a year for hidden and home maintenance costs, with some markets saddling owners with $10,000 to more than $13,000 in expenses.

According to an analysis from Zillow and Thumbtack, homeowners pay an average $6,042 per year in unavoidable hidden costs, which include insurance, property taxes and utility cost spikes.

For optional home maintenance costs like housecleaning, yard care, gutter cleaning, carpet cleaning and pressure washing, owners pay on average $3,435 per year.

“Homebuyers too often fixate on the sticker price or monthly mortgage payment on a house, and don’t budget for the other expenses associated with ownership — which can add up quickly,” said Amy Bohutinsky, Zillow chief marketing officer, adding many first-time buyers are excited about having a backyard but don’t budget for how to maintain that space.

The most expensive metros nationally for home maintenance costs — hidden and optional expenses combined — are:

Boston
San Francisco
Chicago
Philadelphia
Seattle
Los Angeles
Portland
San Diego
Orlando

[…]

For buyers who may be relocating to a different area of the country, Zillow notes that the difference in hidden and home maintenance costs are important to consider. For example, median home values in Phoenix and Philadelphia are fairly comparable at $201,800 and $200,500, respectively.

However, buyers in Philadelphia could spend an additional $3,648 every year to cover the same hidden, unavoidable costs as a homeowner in Phoenix, and an extra $755 per year in maintenance costs.

“As we know, this winter was especially harsh in some parts of the country, and in the aftermath, homeowners can face a lot of unexpected expenses to keep their home in top condition,” said Jon Lieber, Thumbtack chief economist.

The unavoidable hidden costs cited in these findings — insurance, property taxes and utility cost spikes — also represent the expenses of most concern for managers of multifamily properties.

Most rental managers expect overall expenses to rise by 3 to 5 percent, with property taxes slated to rise by 4.5 to 6 percent. Increases in the cost of direct payroll and benefits represent additional expense concerns for managers.

Thoughts from Paul:

Personally, I don’t think taxes are a ‘hidden’ fee in Real Estate because most people pay their taxes every month as part of their mortgage, and the amount is listed on the monthly statement. I’m not being naive here; I know most people don’t read their bills that closely. But this number doesn’t change very often (annually at the most) and it doesn’t require much brainpower to keep this number in the back of your mind as part of your financial planning.

What do you think? Do you consider Real Estate Taxes a ‘hidden’ fee? Are there other fees that should have been included here but weren’t? Comment below.

Thanks for reading!