On average, repair and maintenance costs for a home come in at more than $7,000 a year, according to a new survey, published this week by Synchrony, a consumer financing company. That adds up to $339,000 over the lifetime of the home — or $418,000 with emergencies.
Most homeowners expect to pay between $1,000 and $5,000 annually for maintenance costs, creating a significant gap between budget and actual costs. And that can lead to delays in essential repairs, which often create bigger — and more expensive — problems. Roughly 90% of homeowners have a repair that should be done now, the survey found.
"At a time when homes are older and more expensive to maintain, many homeowners are unprepared when it comes to understanding and planning for the real cost of maintenance and repair," said Curtis Howse, EVP and CEO, Home & Auto, at Synchrony, in a news release. "Our Lifetime of Home Care study reveals a critical disconnect between perception and reality and highlights why greater awareness of costs and flexible financing solutions are essential to keeping homes safe, sound and livable over time."
Where the Money for Repair and Maintenance Costs Goes
Annual maintenance costs are fairly modest. Synchrony estimates an HVAC inspection typically costs about $118, while gutter clearing is roughly $108.
But the big-ticket items come up periodically but relentlessly:
- Roof replacement — $11,373 every 25 years
- House exterior painting — $3,616 every 8½ years
- HVAC replacement — $8,219 every 18 years
- Furnace replacement — $7,258 every 18 years
- Water heater replacement — $1,509 every 10 years
- Kitchen countertop replacement — $3,960 every 20 years
- Interior painting — $1,547 every 6 years
- Insulation replacement — $2,749 every 20 years
Of course, those figures are national averages and will vary depending on the size and condition of a home and where it is located.
And those costs involve running to stand still. True, the homeowner should get an up-to-date (and hopefully more efficient) furnace and HVAC system when those are replaced.
But home improvements that keep the place modern and marketable are extras. How long will it be before a homeowner wants to remodel a kitchen or bathroom?
Emergency Home Repairs and Emergency Savings
True, that survey covered all Americans, and one might hope that homeowners are more financially secure than the average Joe and Jane. But that may decreasingly be the case.
We reported in January that For Some Homeowners, Rising Health Premiums Now Cost More Than Their Mortgage. And earlier this month, we discussed Hidden Housing Costs: Taxes and Insurance Now Take 21% of the Average Mortgage Payment. Meanwhile, homeowners share the same affordability issues with day-to-day living costs that all Americans face.
During such financially stressed times, fairly few homeowners are likely to have the ability, inclination, or self-discipline to say to themselves, "I must put aside $455 this year so I can pay for my new roof to be replaced on schedule in 25 years. And another $456 so I can replace my HVAC when that's due. And all the other sums I should be paying into my sinking fund to cover future scheduled maintenance."
I'll Have Moved by the Time These Costs Fall Due
Homeowners might think they don't care about scheduled maintenance because they'll likely move home in the next decade. But, assuming they don't become renters, they'll still face similar costs when they buy their next home.
And even if that home is brand new, they should still expect to need a new roof in 25 years and a replacement HVAC system in 18 years. And it will still take saving $455 and $456 each year, respectively, to cover just those two costs.
Where the Money for Repair and Maintenance Costs Comes From
Of course, many homeowners are great money managers and will have funds in reserve to cover scheduled maintenance or to pay for unexpected repairs. However, a great many others struggle to stay on top of bills, let alone plan and save for future eventualities.
For the latter group, Synchrony's survey identified four options:
- Get a personal loan
- Use a credit card
- Delay the work or do only part of the job
- Borrow from family and friends
But for many homeowners, there's a fifth way to borrow for major expenses that is typically much more affordable than a loan or plastic. And that's to tap their equity.
Homeowners with plenty of equity (the difference between the home's market value and the current mortgage balance) can usually borrow relatively inexpensively, using some of their home equity as collateral.
To discover more, read Home Equity Loan or HELOC? It Depends on Your Goals.
