Shortage of homes has made a lot of our buyers anxious and nervous. And lost in the midst of rising home prices, most of our anxious buyers might lose sight of the hidden costs of home ownership. Some of these are:
1) Property Tax Rise: When you purchase a home, your property taxes are re-accessed based on the purchase price of the home. However, the tax assessor’s office recalculates your taxes every year and since we are in the midst of another frothy market, the odds of you getting a higher tax bill every year is very good.
And if you needed an example, if your home is valued at $1.25 million dollars you should expect about $13-15k of annual property taxes. That’s about 1,300 of monthly payments that you have to account for.
2) Deferred Maintenance: if you are purchasing a home without a full inspection, you might be in for a shock on repair needs such as termite, foundation, plumbing or roof repairs that might have gone un-detected. Ironically since we manage rental properties for our clients we are in a unique position of seeing the impact of these repairs on their ROIs.
3) Utility Costs: The cost of a hearing and cooling of a poorly insulated old home could be huge. In fact, we spend more than $300 per month on such a home in Los Gatos. And these costs rise annually unless you are lucky enough to install Solar panels with some of the providers such as Solar City which offers fixed payments for 20 years.
4) Furniture: Depending on the size of your home furnishing a home with qualify finishes, drapes and carpet can add up. So, keep the interior finishes in mind when you are crafting a strategy to purchase a home in Silicon Valley.
5) Landscaping: Yard maintenance and landscaping could set you back a decent penny depending on the size of your property. In fact, California is now in the midst of a voluntary water conversation which we anticipate will become mandatory in 2015.
Let us know if we have missed any home ownership costs that surprised you.