National and California-specific Increases
According to a Bankrate report, across the U.S., homeownership costs have risen 26% since 2020, but California saw an even steeper 32% increase.
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This jump is higher than the national average, reflecting the state’s unique economic pressures and housing market dynamics.
Average Annual Homeownership Costs
The average annual cost of owning and maintaining a single-family home in the U.S. reached $18,118 in March 2023.
Source: Freepik
In California, this figure is much higher, at $28,790, due to the state’s higher property values and associated expenses.
Breakdown of California's Homeownership Costs
Owning a home in California comes with some hefty price tags. Annual maintenance costs around $16,966, but that’s just the beginning.
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Add in $6,832 for property taxes, $1,572 for homeowners insurance, $1,434 for cable and internet, and $1,986 for energy bills. No wonder homeownership expenses in the Golden State are sky-high.
Expert Insights
Jeff Ostrowski from Bankrate noted, “It was really eye-opening to see just how much it costs to maintain a home.”
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“Until you own a house, it doesn’t dawn on you how much money you’re throwing into the house every month and year.”
Impact of Pandemic on Home Prices
The pandemic caused a spike in home prices, with many states experiencing significant increases.
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California’s median single-family home price was $848,300 in March 2023, driving up related ownership costs.
Maintenance and Property Taxes
Maintenance costs and property taxes are the biggest expenses for homeowners.
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In high-tax states like California, property taxes alone can account for a substantial portion of the overall cost, further straining budgets.
Comparison with Other States
While California saw a 32% increase, Utah experienced a 44% surge in homeownership costs, the highest in the nation.
Source: Quintin Soloviev/Wikipedia
Conversely, Alaska and Texas saw the smallest increases at 14%, highlighting the regional disparities in housing expenses.
Geographic Variation in Costs
Homeownership costs vary widely across the U.S. In Kentucky, annual costs are as low as $11,559, whereas in Hawaii, they reach $29,015.
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California ranks second highest, showcasing the state’s expensive housing market, for better or for worse.
Expert Advice on Financial Preparedness
Ostrowski advises homeowners to be financially prepared for these high costs.
Source: Freepik
“It’s certainly better to be over-prepared and have some extra money sitting in a high-yield savings account, as opposed to under-prepared and scrambling,” he says.
Inflation's Role in Rising Costs
The past four years of inflation have significantly impacted homeownership expenses.
Source: Freepik
Rising prices for goods and services, including construction materials and utilities, have contributed to the overall increase in homeownership costs.
Looking Ahead
As California’s housing market continues to evolve, homeowners need to stay informed and prepared for potential cost increases.
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Understanding and planning for these expenses is crucial for maintaining financial stability in the state’s competitive housing environment.