The True Cost Of Homeownership: Average Owner Spends Nearly $18K On Additional Costs Per Year

Homeowners grapple with a myriad of property-related expenses, including insurance, property taxes, utilities, renovations and more.

“The True Cost of Homeownership 2024 Data,” a new report from Real Estate Witch, unveils the reality of homeownership costs that have left homeowners with additional fees far beyond the mortgage payment.

The study, surveying 1,000 homeowners, reveals that the average homeowner spends $17,958 each year on additional expenses, a staggering 78% higher than the typical expectation of $10,094. This eye-opening disparity has left nearly 9 out of 10 homeowners in agreement that homeownership is way more expensive than expected.

With interest rates hovering around 7%, mortgages have become a significant burden for buyers, and falling home prices due to lower demand have cost sellers potential profits. Amidst these challenging circumstances, many homeowners prefer to neither buy nor sell, opting instead to hold onto their current homes for the time being. However, the report highlights that choosing to do so comes with “crushing costs.”

Beyond recurring mortgage payments, homeowners must grapple with a myriad of property-related expenses, including homeowners insurance, property taxes, utilities, renovations, and maintenance. This financial strain has taken a toll on homeowners, with 36% saying their home is a detriment to their finances and 23% citing a negative impact on their mental health. The report shows that the average homeowner forks out over $4,000 on maintenance and repairs each year, driving some to accumulate significant debt to afford these expenses.

Excluding mortgage principal and interest, 3 in 5 homeowners dedicate at least 10% of their income to cover additional costs for their home. Alarmingly, around 20% amassed more debt to cover homeownership expenses, resorting to measures like credit card debt, loans, dipping into retirement savings, and even selling valuable possessions. The Department of Housing and Urban Development deems housing unaffordable when it exceeds 30% of one’s income, a threshold likely surpassed by many homeowners due to unforeseen expenses noted in the report like roof work, plumbing, HOA, electrical work, appliances, and foundation repairs.

The financial strain has left around 67% with regrets regarding becoming a homeowner, with over 40% of recent buyers admitting they overpaid for their property. The author of the report, Matt Brannon, recently emailed BLACK ENTERPRISE, alerting how the costs have left around 65% of Black homeowners regretting their home and 55% feeling a sense of buyer’s remorse.

“Spending $17,958 per year, it would take a homeowner just five years and seven months to rack up $100,000 in additional expenses,” the report notes. “Over a 30-year mortgage, that’s a whopping $538,740 — enough to buy a second house!”

Faced with such exorbitant costs, about 295 of the surveyed homeowners are moving towards selling their properties within the next five years, as the expenses prove to be unattainable for the average American. More than 1 in 4 homeowners even express a desire “to go back to renting.” The majority now state they would have approached their purchase differently considering the actual costs of maintaining a home.

For aspiring homeowners, the report reflects on factors current homeowners say they would have considered, like purchasing low-maintenance properties, negotiating prices or contingencies, saving more, paying for inspections, opting for less expensive homes, or waiting for more favorable mortgage rates and prices. BE previously noted that for Gen Z and millennial buyers, over one-third have turned to parents for assistance.