The price of owning a home goes far beyond the initial payment after signing the contract.
Why it matters: As home prices continue to rise, and mortgage rates have reached a 22-year high, the total cost of homeownership in some areas of the U.S. reveals eye-popping figures in a new report.
- It would cost the average American $623,290 to own a home over the average property lifetime, according to a report from the credit building company Self.
By the numbers: The report calculated the average cost of owning a single-family home over 13.2 years — the average occupancy period — in all 50 states and Washington, D.C.
- In addition to purchasing and closing fees, the total figure was also factored in other costs beyond mortgage repayments that homeowners face: insurance, ongoing maintenance and utilities such as gas, electric, water and WiFi.
Between the lines: Hawai'i residents spend the most at an average of $1,482,229 over the average property lifetime, while West Virginians spend the least at $321,194.
- The most expensive states for homeowners included Hawai'i, California, Washington, and Massachusetts, plus Washington, D.C., per the report.
- The least expensive states to own a home included West Virginia, Mississippi, Oklahoma, Ohio and Iowa.
Between the lines: Mortgage repayments for a typical 3-bedroom home cost $322,147 over the average property lifeline and included "private mortgage insurance, homeowner's insurance, and property taxes," the study found.
- Mortgage repayments, average utility costs and average closing cost fees significantly increased the "true cost of homeownership" for a single-family home across the U.S.
- "The average cost of utilities, including WiFi, for a single family home over 13.2 years is an average of $54,662," according to the report.
- The average closing fees stood at $5,964 for a single-family home.
Zoom out: There are several ways to reduce homeownership costs, such as "a larger down payment, efficient appliances, alternative energy strategies and do-it-yourself repairs" and "refinancing at lower rates" when mortgage rates recede, per the New York Times.
Our thought bubble via Axios' chief economics correspondent Neil Irwin: Buying a home essentially means buying two things: the land underneath, which tends to hold its value or appreciate — and the house itself — which is a depreciating asset. Homeowners end up paying for that depreciation one way or another.
- Some shadow benefits could include de facto buying insurance against being priced out of the place you live, the tax advantages with the equivalent rent you receive from your house being untaxed and the optionality of mortgages to stand pat or refinance based on rates.
Go deeper: The problem with America's high homeownership rate