Rising Hidden Costs of Homeownership
Dagen McDowell has expressed concern that the latest cost-of-living adjustments could worsen the financial situation for Social Security, warning that retirees may face a significant benefit cut of 22% by 2032, largely due to the declining ratio of workers to retirees.
On a related note, the unseen costs associated with homeownership are climbing, having increased by nearly a third over the past five years. Home expenses such as insurance, maintenance, and property taxes are increasingly taking a toll on homeowners’ budgets.
A recent report from Zillow and Thumbtack reveals that these hidden costs average around $16,566 annually for typical homeowners, which breaks down to approximately $1,380 a month, not including mortgage payments.
Breaking down the total, homeowners in the U.S. can expect to pay about $11,171 each year in maintenance, $2,266 for homeowners insurance, and $3,129 for property taxes.
“A lot of households get so caught up in securing their homes that they overlook the ongoing living costs,” notes Kara Ng, a Senior Economist at Zillow.
“Even after getting the keys, expenses like insurance, taxes, and maintenance remain recurring monthly challenges. Since these costs can vary so much from one market to another, it’s crucial for homebuyers to calculate and understand their true affordability before making any offers,” she added.
In recent years, hidden costs have seen a sharp increase, especially homeowners insurance premiums, which have surged by 54% over five years. Maintenance costs are up 32% in that timeframe, and property taxes have risen by 19%.
In terms of overall homeownership expenses, there’s been a 3% increase in the past year alone, with a cumulative 32% rise over the last five years.
The Zillow and Thumbtack analysis shows that maintenance costs have notably shown a slowdown, with annual increases decreasing each year over the last five years, dropping from 9% growth in 2022 to just 1% in 2026. Insurance premiums have also stabilized, with only a 0.3% increase from February to June of this year.
“It’s positive to see a slowdown in maintenance costs, especially for homeowners juggling numerous expenses,” remarked Kendra Sinclair, a home trends expert at Thumbtack. “Regular upkeep planning can help avoid large repair bills down the road, which can be quite a relief.”
In some major U.S. cities, it appears that affordable homes still exist. However, homeowners in multiple metropolitan areas have witnessed insurance premiums spike by at least 50% over the past five years. This trend has been most pronounced in cities like Dallas (75%), Tampa (71%), Denver (70%), and Houston (69%). These rises are likely driven by severe weather incidents, including hail and tornadoes.
Maintenance expenses represent the largest component of these hidden costs, accounting for about two-thirds of the national total. In major markets like Seattle and Boston, these costs alone topped $12,000.
Additionally, Los Angeles saw the steepest increase in maintenance expenses, which rose 27% year over year, attributed to various regional factors such as wildfire recovery efforts and rising labor costs. Overall, navigating the complexities of homeownership is becoming more challenging as these hidden costs continue to rise.
