Buying a home is a big decision and an even bigger investment. For many, purchasing a home will be their most significant financial transaction, becoming the most valuable asset they own.
While some buyers look for “move-in ready” properties, others are eager to reinvent a place to match their tastes. Regardless, once the home is occupied and mortgage payments ensue, the cost of improving and upgrading a home over the years to keep pace with wear and tear can add up. So unless you’re Tim “The Tool Man” Taylor and have an inventory of free “Binford” products to install around the home yourself, you’ll want to consider including these future costs in your money plans.
What types of home maintenance should I expect?
Purchasing a new home is an exciting prospect. But even a just-built property will face certain upkeep costs, some sooner than later. So, when you plan for your future maintenance, consider budgeting for expenses like:
· Updating walls with new paint or wallpaper
· Fixing swelling or unaligned doors
· Leaky roofs or overfilled gutters
· Plumbing and sewage problems
· Wiring issues
· Lawn care and fencing
· Appliance repairs or upgrades
Timing when you make certain purchases can help you save money in the long run. But, again, watching current market trends will inform you. For example, look at the housing industry, which is experiencing material shortages. Adding on a new addition to your home to increase its resale value may cost more as a result now than it may in the future.
How much does it cost to maintain, improve, and upgrade a home?
So, just how much does it cost to maintain, improve, and upgrade your home so that, when and if you decide to move, buyers will see it as a place they’d love to live too?
According to HomeAdvisor, the average renovation and remodel sits at $46,734. Many homes will fall in a more extensive range of $18,150 to $76,370, though. Breaking that amount down, renovations generally cost $10 to $60 per square foot, although certain rooms will run higher than that. Kitchens, basements, and bathrooms are typically the most expensive, with a kitchen alone costing around $25,000 to renovate.
In addition, the type of home you are renovating will also bring that square footage price up. For example, a Victorian home will cost about $20 to $200 per square foot, whereas a condo runs around $75 to $100 per square foot.
Overall, expect to find multiple quotes for the repair or maintenance you require. And then budget another 20% to cover any unforeseen mishaps. For example, accidents can occur during the job, or you may find out you want to change the fixture you chose. A cushion will allow you to recover from these unexpected accidents and alterations.
If you keep to regular schedules (like your oil changes and tire rotations on your car), then you’ll probably also need to plan for the cost of doing regular home changes so that you aren’t tempted to put them on the charge card.
Experts will tell you to save regularly for ongoing home maintenance and improvement. What you save so that you’ll have the cash available when needed should already be a part of your calculation for monthly home costs, just like your mortgage and any homeowner association costs.
Inflation impacts the cost of home improvement
With all these impending costs, it would be nice if we saw a drop in prices. However, according to HomeAdvisor and its 2021 True Cost Report, many home improvement projects saw price inflation of 10% and more during 2020.
For example, building an addition, closet, or cabinets saw the most significant uptick in pricing from 2019 to 2020, at 49%, 38%, and 30%, respectively. Although multiple factors influence market prices, two main concerns drove prices up: supply costs and workforce pressure.
During the course of the COVID-19 pandemic, certain supplies became more expensive. In particular, lumber costs skyrocketed, making materials like plywood and framing lumber more expensive. However, there was still high demand in the housing market. So, there was a lack of supply to meet demand. In addition, the labor market is suffering from a shortage of skilled construction workers and builders. That also impacts the overall housing market and its costs.
Other influences on the cost of home improvements
You never know what the future may hold. But you can guess that certain home repairs and maintenance will be more expensive than others. Having the funds that accommodate your expectations will make any emergency easier to bear.
· Your home’s age – Just like you, your home will have its aches and pains as it ages. The older it gets, the more repairs and upkeep you will likely run into. So, as your property ages, consider saving more to accommodate the more frequent and higher expense maintenance needs. In addition, regular home maintenance checks can help you minimize these costs.
· Your home’s location – The scenic view out of your bay window may hold more dangers than you thought. Specific areas can increase the risk of exposing your home to specific hazards, like floods. So, if you regularly see water in your basement or deal with frozen pipes, you’ll probably have more home improvement payments on your hands.
· Your home’s condition – Most homeowners want a house they can take pride in. But maybe you decided to purchase a fixer-upper or an older property with some wear and tear. If the home’s condition needs improvement, you may see more repair expenses long-term than other owners.
How to save for maintenance and renovation costs
How much should you save?
Here are the two suggested ways to approach this additional homeownership cost:
1. Save 1% (some experts suggest up to 4%) per year of the total cost of your home;
2. Save $1 per square foot per year.
It’s challenging to plan for all repairs or maintenance needs. But having this kind of nest egg put aside makes it easier to cover the costs when the need (or desire) arises.
Here’s a tip – add the amount you budget monthly for your household costs to one of the above options and make it a regular payment to a particular savings account. Then, when the water heater goes out, you’ll feel good knowing you have the cash saved up ready to go.
Overall, owning a home is a valuable milestone for anyone. It’s a place to settle in with your family and build memories. But protecting that haven comes at a cost. With the spike in material prices and more jobs than workers following COVID-19, many in-home repairs see higher costs coming down the line for regular homeowners.
So, it’s vital to budget accordingly: consider your situation, the state of your house, and outside circumstances. You may need to plan certain repairs strategically in combination with saving to minimize your spending.