Buying a home is usually the biggest financial decision a family will make. As readers know, I’m a big fan of homeownership, even if it means stretching a family’s finances a bit. However, the numbers used to calculate affordability must be accurate and realistic.
All home buyers scrutinize their projected mortgage payments and property taxes, but many ignore less obvious but real homeownership costs.
A house can be a money pit, which is why many financial experts are reluctant to even call a family residence an investment. I strongly disagree with that perspective, but it’s indeed important to consider all aspects of homeownership, beyond just the mortgage and property taxes, before taking the plunge.
Utilities
Let’s start with the simple stuff. Larger abodes cost more to heat, cool, and water. Utility expenses will skyrocket when a family moves from a modest apartment to a house double or triple the size. The architecture of a house also affects utility costs. High ceilings, soaring atriums, and magnificent windows are aesthetically desirable, but they also drastically increase utility usage. Fancy soaking tubs and pools use tons of water, as do heavily landscaped yards (though wells may mitigate outdoor water bills). The larger space and upgraded amenities may be worth it, but they aren’t free to operate.
Cleaning Costs
Cleaning a bigger, more ornate home will also be more costly, whether it’s paid in money or time. Especially with the direction the prices for cleaning ladies have been heading, keeping a large home clean and sparkling is not a small expense today. Paying for cleaning help is typically a significant investment financially, and in many other ways, but the larger sums required after a housing upgrade should be accounted for. Time is very valuable, so even if the plan is for the family to pitch in more, it’s far from cost-free.
As an aside, there’s a fascinating insight about cleaning one’s own home in “Building for Eternity”, a wonderful ArtScroll book about R’ Moshe Reichman z”l. R’ Moshe and Mrs. Leah Reichman made a conscious effort to minimize the negative effect that abundant wealth may have on children. Although the cost of cleaning help was inconsequential to them, once a week, Mrs. Reichman and her daughters would scrub the entire house themselves, top to bottom. “A person never knows where they will end up in life,” she would tell her brood. If occasionally cleaning her home wasn’t beneath the aristocratic Mrs. Reichman, it isn’t beneath anyone!
Maintenance
Tenants often complain about “throwing out money,” but owners need to “throw out” a lot of money too. Besides basic home repairs and replacing things like bulbs and filters, nothing physical lasts forever. Even if a house is brand new, keeping it in tip-top shape is costly. Lawns and landscaping need cutting, trimming, treating, and clearing. Appliances, HVAC, and plumbing systems require maintenance. Flooring, window treatments, and wall coverings become stained, scratched, and faded. Serious expenditures are required for home maintenance.
Of course, if a house under consideration for purchase isn’t new, it will almost definitely need investment in the near or intermediate future. Either way, every component in a house is degrading every day and will eventually need to be replaced. If an appliance or carpet will last about 10 years, 10% of it is getting used up every year. If a brand-new roof’s life expectancy is 20 years, that’s an annual 5% loss which needs to be funded. In fact, the only part of a house that’s not constantly physically degrading is the land upon which it sits.
Add it to the Bill
Even though it’s not an annual set amount, home maintenance and replacement costs are real and should be planned for, at least in a rough sense. A family that calculated home affordability down to the penny while ignoring the potential for many thousands of dollars in ongoing maintenance and occasional repairs is being foolhardy. Of course, the larger and more elaborate the house, the more costly maintenance and repairs get. A house is a relatively good place to extend oneself, but it should be done with eyes wide open.
Fill ’er Up
Up until this point, we’ve been talking about things which are mostly uncontrollable expenses. But there’s a very normal tendency to feel the need to furnish and decorate a new house, especially if it is indeed sparkling new. Typically, people move into far larger spaces which will require furnishing. Additionally, once it’s a purchased home rather than a rental, there’s a sense that investing in upgraded, higher-end stuff makes more sense.
People who move into their dream homes often also move into a dream-like state, enticed by the endless advertising which encourages them to spend and spend and spend since “you’re amazing and you’re worth it.” Well, I agree you’re amazing. I’m not convinced it’s always worth it, though. If you are not well placed to meet other financial goals, it’s definitely not.
The Costs of Keeping Up
The most consequential hidden cost of a house may be how neighbors can raise the bar on a family’s standard of living. People are very much influenced by peers, so choosing a home in a particular neighborhood is often choosing the standard of living that one will hold themselves to.
From cars to clothing, food to vacations, gifts to simchas, the difference in the standard expenditures between a fancy and simple neighborhood can be vast. So, choosing to upgrade into a house is often choosing to upgrade the income one needs to attain to make ends meet.
The Mesilas Yesharim (chap. 15) warns even those who are on lofty levels about “frequenting those aristocrats and affluents who chase honor and increase vanities, for when one sees their honor and grandeur, it is impossible for lust not to be roused within him to covet the same.”
For most people, choosing to be part of a high-spending crowd equals choosing a lifetime of high spending. And the burden of that hidden cost decision may be greater than any mortgage.
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