These States Have the Highest Hidden Costs of Homeownership

Owning a home can be expensive, and that’s because there’s much more that goes into it than just paying your mortgage, property taxes and insurance.

A new study points out that the average cost per year to own and maintain a single-family home in the country is more than $18,000.

The Bankrate analysis found that the costs of owning a home in the U.S. have increased 26% since 2020. This comes as inflation is still out of control, mortgage interest rates are hovering around 7%, and the median house price is around $390,000.

All told, this means that homeownership — which has always been considered one of the greatest ways to build wealth — is becoming very expensive.

The Bankrate study points out that there are major discrepancies in the cost of homeownership from one state to the next. There are local factors in play, such as local taxes, inflation and the price of homes in a particular region.

As Jeff Ostrowski, the co-writer of the report, told Newsweek:

“The price of everything, including homes and building materials, has gone up over the past four years, so it’s not a surprise that we found that hidden costs have gone up, too. One major factor is that home values have surged.”

For many people in certain states, homeownership has become a far-off dream, rather than a near-term possibility. In just the last four years, home prices have soared so much, and interest rates have increased so sharply, that it’s nearly impossible to even purchase a home, let alone maintain one.

The study found that states such as New Jersey, Hawaii and California have ownership and maintenance costs that exceed $25,000 per year. The states with the lowest average cost — with annual expenses that total about $12,000 — include Mississippi, Kentucky and Arkansas.

The highest average annual cost is in Hawaii, which sits at $29,015, according to the study. The very expensive real estate market in the state is a primary driver of that cost. Typical single-family homes cost around $993,000.

As a result, that drives annual maintenance costs, which the Bankrate study puts at around 2% of a home’s value. This means that cost is almost $20,000 per year in Hawaii.

California’s annual cost is $28,790, with the median single-family home valued at $848,300.

New Jersey has high property taxes, averaging $10,026 per year, which is the nation’s highest. The median home price there is $502,400, which results in annual maintenance costs and other expenses totalling $10,048 per year.

In total, residents of the Garden State pay roughly $26,000 every year on these hidden costs of homeownership.

As Ostrowski said:

“The biggest part of our cost estimate — ongoing maintenance and repairs — is based on a homeowner spending 2% of the home’s purchase price annually. And 2% of today’s home price is a bigger number than 2% of home prices at the start of the pandemic.”