People assume it’s better to buy than rent, to have a home and more space rather than a 2 bedroom condo. But, I have to challenge this 2.5 years after buying my first single family home. This is my first time not renting. I missed a few opportunities to buy and bailed. I’ve always been confused and scared by the housing market. My husband likes space and quiet, so we bought a big house on a bigger lot than I would have chosen.
We all know there’s still a myth that the recipe for success remains: go to college, get a “respectable” full-time job, get married, have kids, and a buy a single-family home. That’s not true. Everyone’s definitions of success and happiness look different. Also the economic landscape has also changed. Home prices are high, inflation is crazy high, and many young millennials are finding they don’t want to sit at a desk churning for 45 years.
Plus, let’s be honest, a single family home requires a lot of maintenance. To own and maintain a home costs more than mortgage interest, home insurance, property taxes, and for some Private Mortgage Insurance (PMI).
Unless you live in a city where the cost per square foot is crazy and values increase more than the usual 3-6% annually — such as San Francisco, NYC, Boston, and Los Angeles — most of us just hope we’ll breakeven after paying for the following:
- Closing Costs
- Mortgage Interest
- Home Insurance
- Property Taxes
- Structural Maintenance
- Curb Appeal Maintence
People are a bit more open about the real cost of homeownership now, but not to the degree that they should be.
I love my home. I love my neighborhood. I’m blessed and privileged to be able to own a home and live where I do. But boy does it cost a lot to maintain a home, when one is blessed to be able to have a good size lot, in a town with good schools.
Below is a list of some costs we’ve paid since we moved in. The table below that are real actuals of different expenses we incur; some are monthly, quarterly, twice a year, and ad-hoc.
1. Fall Cleanup. We initially paid $800 annually to clean up mountains of maple leaves and pine needles. This year is jumped to $930. I’ll be looking for a new company!
2. Plowing. We pay $60 for every 6″ of snow. We usually have at least one blizzard, sometimes two a season, which result in between 12-18 inches of snow in one storm. This season usually runs from December to March.
3. Heating Oil. This season it has been~$500-600 every time we get ~170 gallons of heating oil. We usually fill between November and March.
4. Gutter Repair. This is the most opaque industry I’ve encountered so far. We had them cleaned for maybe $120 and it was worth every penny. But replacements, which they push hard, can cost thousands. Gutter industry companies make you think a bad gutter will result in rotting in the wood underneath, the fascia. They seem to play the scare tactic game and most seem shady to me.
5. Real Estate Tax Override. In Massachusetts, there’s a rule that the property tax can’t exceed 2.5%. But, the city or town can request an override if there are unexpected expenses that are not in the budget. While 2.5% may not seem like a lot, it compounds over time.
For example, if your annual taxes are $10,000, a 2.5% increase would mean a new rate of $10,250. A 5% increase would mean $10,500. Maybe you can afford another $250. But, now I believe that new rate becomes the base for next year’s levy.
Have you considered the real cost of owning a single family home when you go to open houses? Here’s what we pay. Yes, some are by choice, such as pest control. But the main point here is couples often feel this pressure to buy a home when they are starting a family. In my opinion, it’s the worst time. Yes, when you go from a couple to parents, you need more space. But, it’s also the biggest financial change in one’s adult life, in my opinion.
The numbers below are estimates based on our historical spend. Note that we live in the Greater Boston Area, which is a High Cost of Living Area (HCoL).
Don’t let people push you to pursue a life because it looks like theirs. Don’t let anyone pressure you to buy more home than you can afford. Often times we buy new homes when we have kids, which is right when you suddenly have childcare costs.
What surprised you most about home ownership? Are you recosidering buying because of the housing market now? Comment below on your thoughts, and anything I missed, whether you agree or disagree.