We’ve lived in our house for 14 years now. We love it. We’ve made many memories in it, and it’s served as the headquarters for the Art of Manliness. Our house is home for us.

With that said, something I’ve learned as a homeowner during the past 14 years is that owning a home is pretty freaking expensive. And many of the expenses I’ve had to lay down cash for have been for things that weren’t even on my radar when Kate and I signed the mortgage.

These extra, overlooked costs of owning a home are often called “phantom costs.” Phantom costs include things like maintenance and repair costs, rising property taxes, and insurance premiums. If you want to know the true cost of homeownership, you’ve got to take into account these hidden costs in addition to the more obvious ones.

If you’re thinking about buying a home, phantom costs definitely need to be on your radar as you decide whether to buy a home or continue renting. If you own a home, you need to know about them so you can budget for them.

In today’s post, we’ll break down everything you need to know about phantom homeownership costs.

What You’ll Pay in Phantom Homeownership Costs

There have always been phantom costs with homeownership. But in the past five years, they’ve gotten significantly steeper. According to Bankrate.com, the average homeowner now shells out $18,118 annually ($1,510 monthly) on property taxes, insurance, utilities, and maintenance. That’s a 26% jump from 2020, when these expenses averaged $14,428 annually.

To put that in perspective, if you’re paying the national median mortgage payment of $2,256, these additional costs add another 67% to your homeownership-related expenses. Basically, to own a home in America today, you’ll likely have to pay expenses that are equivalent to buying a used car every year.

While $18,118 is the average in annual phantom homeownership costs, they’ll vary due to where you live. According to that Bankrate study, here are the states with the highest yearly phantom homeownership costs:

1. Hawaii: $29,015
2. California: $28,790
3. Massachusetts: $26,313
4. New Jersey: $25,573
5. Connecticut: $23,515

And here are the states with the lowest:

1. Kentucky: $11,559
2. Arkansas: $11,692
3. Mississippi: $11,881
4. Alabama: $12,258
5. Indiana: $12,259

Older Homes Mean More Phantom Ownership Costs

One factor making phantom costs even steeper is the increasing age of America’s housing stock. According to the U.S. Census Bureau, the median age of owner-occupied homes is about 40 years old. That’s a lot of aging roofs, worn-out HVAC systems, and creaky appliances waiting to fail.

Our home is nearly 40 years old, and while it’s in pretty good condition, it’s at the point in its lifecycle where things are wearing out and need to be replaced. Most of our phantom costs have come from replacing and repairing things. Here’s a rundown of some of the repairs I’ve had to fork over money for during the past 14 years:

• Fixed several leaks in roof.
• Replaced almost all the windows due to rotting wooden frames.
• Replaced the back deck that was about to collapse due to decades of weathering.
• Replaced the old furnace that died on us one winter.
• Replaced the icemaker that died.
• Replaced the swimming pool’s filter, pump, and vinyl lining.

Inflation and rising labor costs have only caused home maintenance costs to go up. I’ve seen this firsthand. We had to replace some windows in our home shortly before the pandemic. After the pandemic, we had to replace another set of windows that were just like the first, but the cost had increased significantly due to inflation and higher labor costs.

Don’t Forget Property Taxes, Insurance Premiums, and HOA Dues

Besides repair and maintenance expenses, other phantom homeownership costs include property taxes, insurance premiums, and HOA dues.

Reports show that property taxes have been rising throughout the United States during the past five years, primarily driven by the pandemic-era home price boom. According to ATTOM, a real estate analytics company, property taxes in America have increased 25% since 2019.

Home insurance costs have increased by 74% in the past five years. Several factors have contributed to rising home insurance costs, including increased frequency and severity of natural disasters, rising construction and labor costs, and inflation. (One thing you can do to manage home insurance costs is to shop around. I was able to save thousands of dollars a year last year by switching home insurance companies.)

If you live in a neighborhood with a homeowner’s association, you’ll likely have to pay dues. I didn’t think about that when I bought our house. And those dues have increased in the past five years due to rising maintenance costs.

Budgeting for Phantom Homeownership Costs

When you add up all the additional expenses I’ve put into my home, the actual cost of homeownership has been much more than the original buying price of our house alone.

Knowing what I know now about the actual cost of homeownership, do I regret buying my house?

Not at all. Like I said, it’s our home. We love it. It’s awesome to have a place to call our own.

In our calculus, the costs of homeownership have been worth it. We don’t like to travel all that much. We’re not clothes horses or foodies. We’re homebodies who not only live at home, but work from home, so having a place we really enjoy inhabiting is important to us.

But I do wish someone had warned me about these hidden costs before I bought the house. It would have helped me budget better and set aside money for repairs and maintenance so I wasn’t blindsided when I had to fork over a bunch of money for this, that, and the other unforeseen thing.

How much should you set aside monthly for home maintenance and repair costs?

According to the experts, a good rule of thumb is to budget 1–3% of your home’s value per year for phantom costs. This will vary based on location, the age of the home, and whether you’re in an HOA. Here’s a breakdown of how that translates into a monthly savings target:

• 1% of home value per year: Minimum, for newer homes in good condition.
• 2% of home value per year: Moderate, for older homes or higher-tax areas.
• 3% of home value per year: Aggressive, for high-maintenance homes or as insurance against unexpected issues.

Besides setting aside money for home maintenance costs, another thing you can do to mitigate phantom costs is to do regular home maintenance on your home. An ounce of prevention is worth a pound of cure and all that.

If you’re considering buying a new home, make sure you include phantom costs in your decision calculus. It will help you make a more clear-eyed decision.

If you own a home, start that maintenance fund now, not later. Build that 1-3% savings cushion into your budget, and treat it as non-negotiable as your mortgage payment. Your future self will thank you for it.