The Other Costs of Home Ownership

June 22, 2009 by  
Filed under Financial Planning

Despite the traumatic breaking of the housing bubble, I think it is fair to say that the desire for home ownership by non-owners remains strong. The lust to be a homeowner almost seems programmed into our DNA, even though a home “owner” these days is in reality more of a long term borrower. For example, 55.4% of Americans in the 55-64 age bracket have a mortgage compared to the national ratio of 48.7%. (Source) Thirty years of debt is a long time.

Home ownership is not an investment in the traditional sense. It can pay off in other ways, if you are able to kill the mortgage.

However, the lustful non-owners tend to focus so much on mortgage interest rates and down-payments, they tend to overlook the other costs of home ownership. These are time and financial commitments that many do not appreciate until they experience them. I should know. Mrs. ToughMoneyLove and I have “owned” homes for all but one year of our 31 year marriage. (We rented during my first year of law school.) For the past 6 years, we have owned two homes, occupying both part-time. I suppose that gives us the equivalent of 36 years of home ownership cost data on which to base what I am writing here.

So let’s list some of the bigger ticket items that those of you who rent and have not yet experienced home ownership may not have thought all the way through.

1. ¬†Taxes and Insurance. These are the usual suspects, only because most mortgage payments include them. But unlike a fixed rate mortgage, taxes and insurance are almost certain to increase over time. Paying off a mortgage isn’t so much fun when you are still left paying $1000/month + in T&I.

2. Utilities. Another usual suspect but often underestimated. You can make it worse with such things as sprinkler systems. Most of my neighbors have them. Not me. Who wants to encourage the grass to grow faster? With cap and trade on the horizon, the energy expense category is sure to increase.

3.  Homeowner Association Dues. These can be relatively low (ours is $125/quarter and that includes twice weekly trash pickup) but can be pricey. Also watch out for special assessments for capital repairs and improvements to common areas.

4. Lawn Care. Hate it. Hate it. Hate it. You invest your time or money or both – your choice. Don’t forget the cost of lawn mowers, tools, etc. It never ends.

5. Exterior maintenance. New roof. Painting the siding or trim. Driveway sealing. Deck sealing and repair. New windows. I’ve had to pay for all of this. Some of these you can do yourself. Others are big ticket items that you need to save for, just like saving to buy a car. Oh, and don’t forget those man-toys that go along with these maintenance items: power washers, compressors, super deluxe ladders, assorted power tools. Unfortunately, credit cards and Home Depot were perfectly designed to encourage us to purchase these budget busters.

6. Interior maintenance. This list is endless. Appliances, HVAC, new carpet, plumbing leaks, painting, more leaks, more painting, new water heater, more HVAC, and so on. If you are handy, you trade your time for money.

7. Keep up with the Neighbor Expenses. These are optional but you won’t resist all of them: backyard pool (please don’t), hot tub (save your money), patio furniture, gas grill (OK – you gotta have this one), home theaters. Everything your neighbor gets will tempt you.

8. Furniture and Space Fillers. Renters almost always have smaller spaces to furnish. Furniture is expensive. There are quite a few McMansions in our community with unfurnished rooms, just for that reason. Similarly, homeowners have a magical ability to slowly but surely fill all available storage space with “stuff” they buy and then don’t use. Lot’s of folks can’t actually fit two cars into a two car garage.

9. Your Time. There is no question that home ownership requires a time commitment way above and beyond that of a renter. A lot of that is pride of ownership and can be fun and rewarding. Some of it is pure drudgery. That’s a real cost in life experience.

I’m exhausted just thinking about all that we’ve done over the years, including everything I’ve listed here.

I’m sure I’ve missed some cost items. Help me out so that non-homeowner readers will have their eyes opened all the way.


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9 Responses to “The Other Costs of Home Ownership”
  1. cjbr549 says:

    Amen. I have a scroll of things to do to my house that it will take me 5 years to finish. Of course, in the meantime another 5 years worth of stuff will crop up. There are disadvantages to renting (which is why I own) but not having the responsibility for maintenance of the house is definitely not a disadvantage. Of course, when I was renting, I usualy just fixed the stuff and billed the landlord for the parts. Probably why all my landlords liked me (that and I paid my rent).

  2. Steve says:

    I agree wholeheartedly. As someone who currently has painters and flooring guys in my house, I can only dream of what I’d have if I had that money in an IRA with compound interest. The costs of owning a home far outstrip any gains through appreciation. Renting is the way to go (for life). I say that as someone who truly loves his house. It’s great, but it’s a financial headache.

    Ditto on the lawncare. How many millions of hours and dollars do we spend mowing that crap as a population?

  3. Kacie says:

    I just moved into another apartment, and reading this post is making me glad I’m still a renter. My expenses are low, and not having to mess with maintenance is GREAT with a baby in the house!

  4. Kacie says:

    Oh, and this apartment has brand-new carpet, new paint on all the walls (and I got to pick the color for the kitchen!), new tile, high-efficiency clothes washer, newer furnace/hot water heater/fridge … I’m happy! And for $745/month plus electric, I do think I got a pretty good deal.

  5. David L. says:

    I owned a home for about ten years and for me, it was just too much darn work! Too much yard work, especially lawn care, then fix this, fix that. Then there are the continually increasing property taxes to deal with. So, three and a half years ago, I sold the house and moved to an apartment again. I couldn’t be happier. No more yard to take care of and I have much more time for other things than taking care of the house.

    The unit that I rent has a very nice stackable washer/drier and a nicely done kitchenette, and heat is included in the rent. For $550/month, I think that I found a good deal, especially for the area I live in.

    The way I see it, home ownership is not for everyone, and I am one of those. I gave it an honest try and found I hated it. In the end, I am glad to be “free” again rather than being tied down to a house.

  6. richgirl says:

    I owned a 2300 sq ft. home for 4 years and that was it for me. What a time and money suck (in every sense of the word). I especially hated the exterior maintenance with a passion. I now live in a high-rise condo that’s only 1100 sq. ft. I don’t mind the dues or property taxes because both are reasonable and I love the city I live in now. Plus, I have more time to participate in my community. It sure beats the drudgery of working on the house.

  7. LOL! Excellent article (coming from a dyed-in-the-wool homeowner…)!!! I’m going blue in the face with all the work and expense entailed in keeping up my paid-off shack. Even with no mortgage, supporting a house ain’t cheap.

    BTW… You don’t need a gas grill. If you use a “chimney” device to light charcoal, an ordinary charcoal grill works great, cooks better-tasting food, and is a LOT cheaper. Esp. if you get the charcoal at WalMart.

    Xeriscapic landscaping can be surprisingly lush and costs a tiny fraction of water-wasting, back-breaking lawns. I don’t water grass and I don’t mow: I blower, maybe once a month. The rest of the time: bask in the shade of paloverdes, palo breas, and acacias while enjoying the oranges, lemons, and limes that grow in the backyard.

    Having lived in many apartments, I will say I dislike apartment living a heckuva lot more than I dislike the work entailed in keeping up my house. Because I paid for the hovel in cash, it actually IS cheaper than renting ($550 a month? Gasp! Where do you live after you’re laid off your job or forced to retire?) BUT…IMHO, while you’re young enough to work, you’re smart to rent low and set aside the amount a mortgage would cost you each month, so you can buy a place outright when you reach retirement age. If you have to go the mortgage route, get a 15-year mortgage and pay down extra principal each month.

  8. Moneymonk says:

    I have been in my home for 5 years now and we have not change any thing major, maybe installed a ceiling fan and changed some light fixtures at most. No major projects to speak of.

    Furniture was bought cash even though it took almost 2 years.

    My friends however, Bought refrigerators, big screen TV with a Sears credit cards, took out home equity loans to put in hardwood floors and could not pay the $300 a year HOA fees. No savings and a pile of debt.

    It all depends on how you attach homeownership. Some take it slow, others go full speed ahead.

  9. My Journey says:

    What an appropriate post! Today my AC died, literally when NY hit 95 Degrees. Thankfully, my wife works from home so she wasn’t miserable at all lol. Then the AC guy came and he charged me $306 and FAILED! So he has to come back tomorrow UGH.

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