APOA | Colin Allen
Homeownership and affordability discussion frequently focus on an individual or family’s monthly mortgage payment. But the true cost of owning and maintaining a home extends beyond one’s mortgage and these expenses can impact household stability, neighborhood resilience, and broader housing-market outcomes.
In addition to principal and interest, a combination of predictable and less predictable costs goes into owning a home. From maintenance and capital repairs, to insurance, property taxes and utilities all factor into the true cost of homeownership. What makes these costs especially challenging is not their existence, but their unpredictability. Even when a homeowner is mindful off these expenses, several variables such as an aging housing stock in some markets, inflation impacting the costs of housing goods and variability across states and local jurisdictions can make these costs difficult to forecast. In fact, over time, these expenses can rival—or exceed—the mortgage itself, quietly eroding affordability even in markets where homes prices appear stable.
Reducing the impact of hidden homeownership costs is less about frugality and more about foresight. Proactive maintenance, energy-efficiency investments, and lifecycle planning improve cost predictability and asset durability. Data-informed approaches to insurance coverage, tax assessment reviews, and infrastructure upgrades can further help manage costs – turning surprise expenses into more predictable ones planned for by a homeowner.
For homeowners, as well as elected officials and regulators creating US housing policy, it’s important to understand homeownership as stewardship rather than a static transaction. Informed homeowners (and potential homeowners), commonsense housing policies, and greater transparency regarding the true cost of owning a home will support more resilient households and create a more stable US housing market.