How Much Do You Spend on Home Maintenance Each Year?

How Much Do You Spend on Home Maintenance Each Year?

The cost of home ownership involves a hefty mortgage, interest rates, property taxes and continuous maintenance and repairs. According to a 2015 study, homeowners in San Francisco spend an average of $13,287 on home expenses other than mortgage and insurance.  The study further notes that the cost of living in San Francisco is 62.6% higher than the US average. These statistics explain the fact why homeowners in the Bay area are spending the most on property expenses.

Brand new homes often do not require extensive maintenance for the first few years. During that time, you may only pay for landscaping and lawn mowing. However, after a few years, you must start saving for monthly & annual maintenance costs.

How to Budget for Annual Home Maintenance?

Percentage Based Budgeting:

Real estate experts agree on two formulas, i.e., pricing ratio & per square foot calculations. A good rule of thumb is to save 1%-3% of your home’s value. Let’s say, the current value of your property is $300k. You should set aside $3,000-$9,000 for continuous repairs. During some years, you may spend less than 1%. On other times, the budget might exceed the 3% mark.

It is a good idea to save 1% money for the first three years and then gradually increase that percentage by 0.5% until you reach the 3% mark. Set aside these payments in a separate savings account so you can tap into your savings whenever you have to pay for some major repairs like roof replacement.

Cost Per Square Foot:

Another way to calculate the expenditure is by looking at the covered area. Let’s say; your property is 1700 square foot. Then estimate $1 for each square foot that becomes $1700. To get a better estimate, take the average of these two calculations. Add the $1700 to $3,000 and divide by 2 and you get $2,650. This amount will be your annual budget for most years.

Annual Costs Associated with Homeownership

Lawn Care:

Greenery is good for your house, but you must pay someone to clean & manicure the lawn for you. If you do it yourself, you just need to buy the equipment. However, if you hire someone else to do it for you then expect to pay $100-$130 per month.

Property Taxes:

Taxes are not necessarily spent on home maintenance but you have to pay them. The average property tax in the US is 1.31% of property value. For a home worth $1 million, you will need to pay almost $13,100 in taxes.

Homeowners Association Fee:

The HOA fees can run between $400-$700 in San Francisco. Depending on the local regulations, you may be required to pay these charges annually or monthly. Homeowners Association fees often cover building maintenance, local amenities, and recent development in your area.

Pest Control:

If you have a lawn, then it is impossible to avoid pests and bugs. Some bugs are hunters, while others destroy your beautiful garden. Pest control is not a monthly expense but expect to pay a few hundred dollars each year mainly at the beginning of fall season.

Emergency Costs:

You cannot budget for every maintenance cost. Most of the time; you have to pay for the unexpected. The furnace does not remain efficient anymore; you need to change the lighting in the yard, the air-conditioning system requires annual inspection and so on. You cannot set aside a monthly budget for these expenses, but you can avoid the stress by saving 1% of your home value for these repairs.

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