How Much Does Annual Home Maintenance Really Cost?

Anyone who purchases a home has a vision of how they want their space to look. Renovations may be possible immediately, but are often delayed until the homeowner has more disposable income. Unfortunately, this disposable income regularly ends up being spent on maintenance rather than on beautifying the home.

Home maintenance is a reality for any homeowner. However, individuals buying houses for the first time often don’t realize just how much they will need to spend on it.

Ideally, you should have funds put aside to deal with any home maintenance issues as they come up. But how much will it really cost each year?

Here is what the experts say.

Your property’s true value

The general rule given to most homeowners is that they should put aside at least 1% of the home’s value each year. However, this generalization has serious limitations.

While assessing the likely maintenance costs on the relative value of a home is reasonable, how much you pay for a home at any time depends on the housing market. Property prices fluctuate, and at times of increased volatility, a property’s price may not reflect its true value at all.

Ideally, you should try and get an evaluation of how much your home would cost during a period of stability. Setting aside 1% or more of this value is a better way of preparing for maintenance than using the price you paid as a benchmark.

Variable factors

Of course, the value of a home does not always correlate with the annual maintenance requirements. An old home, for example, may need far more maintenance than a modern house, even if its vulnerable contents are worth less. Similarly, an old home might require a significant amount of work to be done if new HVAC systems are to be installed.

On the other hand, modern homes with smart functionality and expensive HVAC systems and appliances will require more expensive maintenance on a micro level. These are factors to take into account when setting aside maintenance funds.

Warranties

The cost of maintenance should always be put in context of any warranties on the home. New houses will come with state-decreed warranties on structural and engineering issues. Check with your realtor whether the home you are purchasing or have purchased has any warranties in place.

However, even if there are no current warranties you can purchase your own plan. You can see these reviews of home warranty companies to get an idea of what they pay for. When assessing whether a warranty is worth it, consider it in the context of the “1% rule.”

If you are going to be spending more on the warranty than you are likely to spend based on your home’s value, you are better off putting aside the money for your own use, as long as you can rely on your ability to save. But even if it does not seem like you will be saving much by getting a warranty, it might still be worth it in case of significant damage that you cannot foresee.

There is no one rule of thumb to accurately evaluate the home maintenance cost of every home. Calculate 1% of your value’s true property, but make sure to take context into account.

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