It’s hard enough to buy a home since 2020 with prices up 38% and the interest rate on that mortgage five percentage points higher. However, those two sticker shocks are just the start.
A new report by Bankrate said the hidden costs of homeownership are up 26% since 2020. This includes property taxes, homeowners insurance and home maintenance costs.
According to Bankrate, the tab for a typical single-family home with an average value of $436,291 runs more than $18,000 a year in 2024. That’s $1,510 per month on top of a mortgage payment. In 2020, the same expenses ran $1,202 per month, a 26% increase in four years.
These hidden costs affect all homeowners, from the ones paying a premium to get into the market today to those who have owned for years. Three states in particular are seeing the biggest jumps.
The hidden cost of homeownership in Utah is up 44% in four years, followed by Idaho at 39% and Hawaii at 38%. Utah and Idaho in particular saw huge leaps in home prices since the pandemic, which naturally increases the cost of taxes and insurance.
Hawaii also tops the list for most expensive hidden costs overall at $29,000, while California, Massachusetts, New Jersey and Connecticut round out the top five.
The state with the least expensive hidden costs per year is Kentucky at $11,559, followed by Arkansas, Mississippi, Alabama and Indiana.
But even in less expensive states, the costs are still climbing. The smallest increase in hidden costs is 14% in Alaska and Texas, according to Bankrate.
Meanwhile, more existing homeowners are dropping insurance altogether because of price hikes. Last year, the Insurance Information Institute said 12% of homeowners did not purchase home insurance, up from just 5% in 2019.
In order to go bare, as it’s called, one needs to own the home outright, since lenders typically mandate insurance coverage. This means those unburdened by mortgage payments are still struggling with these hidden, increasing homeownership costs.
As for those hoping to buy a home, the National Association of Home Builders said the typical family would have to spend 38% of their income on the mortgage alone for a new home, well above what’s recommended. That doesn’t take into account the hidden costs of homeownership.
