The Hidden Costs of Home Ownership: $6,000 a Year
Most new homeowners are prepared to pay their mortgages, but they may not be ready for other unavoidable costs that can amount to thousands of dollars every year.
The average homeowner shelled out $6,042 last year in homeowners insurance, property taxes, and utilities, according to a new report from Zillow. The average costs varied by location, with Boston homeowners spending the most ($9,413) and homeowners in Phoenix spending the least ($4,513).
“Home buyers too often fixate on the sticker price or monthly mortgage payment on a house, and don’t budget for the other expenses associated with ownership -- which can add up quickly,” Zillow spokeswoman Amy Bohutinsky said in a statement.
Related: How to Decide if You Should Rent or Buy a Home
The maintenance costs included in the report included things like lawn care and carpet cleaning.
The country’s homeownership rate fell to 63.7 percent in the first quarter, the lowest level since 1989. The rate peaked at 69.2 percent in the fourth quarter of 2004, right before the housing bubble burst.
As rents in many cities continue to skyrocket, however, homeownership may be becoming more appealing. However, in addition to hidden homeownership costs, new buyers should also consider the opportunity costs of potential earnings if buyers had invested their down payment. The New York Times has a handy calculator that incorporates these and other factors to help weigh whether it makes more sense to rent or buy.
Nearly two-thirds of consumers say that home ownership is a “dream come true” and an accomplishment to be proud of, according to a survey released last week by Wells Fargo.
Chart of the Day: Boosting Corporate Tax Revenues
The leading candidates for the Democratic presidential nomination have all proposed increasing taxes on corporations, including raising income tax rates to levels ranging from 25% to 35%, up from the current 21% imposed by the Republican tax cuts in 2017. With Bernie Sanders leading the way at $3.9 trillion, here’s how much revenue the higher proposed corporate taxes, along with additional proposed surtaxes and reduced tax breaks, would generate over a decade, according to calculations by the right-leaning Tax Foundation, highlighted Wednesday by Bloomberg News.
Chart of the Day: Discretionary Spending Droops
The federal government’s total non-defense discretionary spending – which covers everything from education and national parks to veterans’ medical care and low-income housing assistance – equals 3.2% of GDP in 2020, near historic lows going back to 1962, according to an analysis this week from the Center on Budget and Policy Priorities.
Chart of the Week: Trump Adds $4.7 Trillion in Debt
The Committee for a Responsible Federal Budget estimated this week that President Trump has now signed legislation that will add a total of $4.7 trillion to the national debt between 2017 and 2029. Tax cuts and spending increases account for similar portions of the projected increase, though if the individual tax cuts in the 2017 Republican overhaul are extended beyond their current expiration date at the end of 2025, they would add another $1 trillion in debt through 2029.
Chart of the Day: The Long Decline in Interest Rates
Are interest rates destined to move higher, increasing the cost of private and public debt? While many experts believe that higher rates are all but inevitable, historian Paul Schmelzing argues that today’s low-interest environment is consistent with a long-term trend stretching back 600 years.
The chart “shows a clear historical downtrend, with rates falling about 1% every 60 years to near zero today,” says Bloomberg’s Aaron Brown. “Rates do tend to revert to a mean, but that mean seems to be declining.”
Chart of the Day: Drug Price Plans Compared
Lawmakers are considering three separate bills that are intended to reduce the cost of prescription drugs. Here’s an overview of the proposals, from a series of charts produced by the Kaiser Family Foundation this week. An interesting detail highlighted in another chart: 88% of voters – including 92% of Democrats and 85% of Republicans – want to give the government the power to negotiate prices with drug companies.
