NYC Ranks as Top US Metro With High Hidden Homeownership Costs
Hidden costs in New York City homes can easily add up to thousands of dollars every year due to property tax, home insurance, maintenance and utility bills.
When it comes to home ownership, the cost of your mortage is just one of many expenses you will need to factor into your monthly bills. While closing costs and the 20 percent down payment your mortgage lender will require are big upfront expenses, often it’s the smaller, ongoing bills that make a house truly unaffordable.
In certain markets, these hidden costs can end up pushing a home out of the affordable category and into the staying home every weekend, never taking a vacation, house poor category.
According to a study recently released by Realtor.com, hidden costs in New York City (and a number of other cities) can easily add up to thousands of dollars every year. The study looked at the following “hidden costs” and then ranked the cities by how dramatic those costs could end up being.
Hidden Costs Can Really Add Up
The expenses related to the following hidden costs (especially the first two) can add thousands of dollars to your homeowner costs. Here is a quick overview of the various factors that the study looked at:
Property Taxes: In many cases, property taxes will be one of the biggest homeowner expenses after the mortgage payment. First time homebuyers are often surprised by just how expensive property taxes can be, this is especially true in the Northeast and in some areas of the South.
Property taxes are set and collected by the State, County and Municipal governments. It’s possible that numerous government agencies will tax the same property. In most cases, tax rates are linked to home values in that specific area and the money is used to pay for services such as schools as well as fire and police departments.
Property tax calculations will vary by state and even city but as an example homeowners in the Buffalo, New York area are taxed 2.9% of their homes value and Rochester, New York charges 2.8%. While both of these tax rates are extremely high, neither city made the top 10 list when it comes to expensive property taxes, mainly because home values are fairly low.
According to the Census Bureau, the average property tax bill comes to roughly $2,100 a year, which is extremely affordable when compared to some of the markets on the top 10 most expensive list.
In the New York metropolitan statistical area, which covers New York City as well as Newark and Jersey City, the average property tax bill is $7,300. Residents of Bridgeport and New Haven Connecticut also face large bills with the average property tax bill coming in at $7,000 a year.
The top five when it comes to property taxes bills shakes out like this:
If you are considering a property in any of these markets it is always a good idea to check your property tax bill before making an offer.
Homeowners Insurance: Homeowners insurance is an absolute necessity and is required if you have a mortgage. Unfortunately, in some markets, the cost of insuring your property can be so dramatic it can make the home unaffordable, this is especially true in Florida.
Florida, which has seen its fair share of hurricanes and tropical storms, has the highest average cost for homeowners insurance according to data from Insurance.com. In the Sunshine State, the average monthly homeowners insurance bill in Florida is $298, which is almost 3 times the national average of $102.
New Orleans, which is also no stranger to tropical storms and hurricanes, takes the second spot with an average monthly cost of $248. Houston rounds out the top three with an average monthly cost of $162.
If you reside in Florida or Louisiana you should absolutely get a homeowners insurance quote before making an offer on a home as the cost of insurance (especially on coastal homes) can be a deal breaker.
Maintenance and Remodeling: When purchasing a home there will almost always be some type of remodeling that you want to do. In addition, annual maintenance can end up being a major expense. These costs should be taken into account when shopping for a new home.
If you live in an area that is experiencing explosive growth, most contractors may be busy building new homes which will push up the costs of a remodel. If remodeling is a must on any home you are considering, get a quote for the work before putting in an offer as the price may shock you.
According to home advisor the cost for a standard kitchen remodel comes in at roughly $21,680 but that cost can skyrocket depending on your location. In Los Angeles, for example, a kitchen remodel will set you back $31,177.
Utility Bills: Monthly utility bills can be a major expense and one that you should be aware of and investigate before making an offer on a home. In the Northeast, the biggest bill will be heating in the winter while in the South the electric bills for air-conditioning can be extreme, especially during the summer.
Bridgeport came out on top according to Realtor.com with an average monthly utility bill of $309. New Haven was a close second at $291, Boston ranked third at $236, New York City came in fourth with a monthly cost of $234 and Cape Coral rounded out the top five at $220.
Domestic Labor: While this is not a factor for everyone, if you need a housekeeper or lawn person, check local rates before moving. While the average rate for a housecleaner is $12.50 it can range up to $15 or higher.
Check costs for any domestic labor services you may need as these costs can quickly add up.