Upfront Home Costs Add Up

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Two Zillow subsidiaries are estimating it will cost the average U.S.
homebuyer $40,000 to get in the door of their new home.  Depending on where the home is located, according
to a new analysis from RealEstate.com and Thumbtack, the number could be $26,641 (in Cleveland)  or $202,834 (San Jose.)  That headline number however is a little
misleading.

The study looked at the
one-time fees that homebuyers can expect as they close and move into those
homes, and the largest chunk is, of course, the downpayment. In their analysis
the two companies estimated the amount needed for a 15 percent downpayment on a
typical U.S. home ($32,700 in July 2018) plus additional costs.

First there are closing
costs, including the origination fee, appraisal, transfer taxes, title
insurance, the first year of homeowners’ insurance.  These add about $6,250 to the cash needed to
close on a loan. Other costs are those for moving (eight hours of a moving van
and movers and/or pizza and beer for friends who volunteer to help), changing
the locks, mounting the television, cleaning the house and yard; figure another
$1,130 on average.

But the downpayment is,
of course, the big variable in this discussion. The total costs in Cleveland
are the lowest because, according to Case-Shiller, that city has the lowest
home prices in its 20-City Composite Index. San Jose, while not a city tracked
by that composite, is generally said to have the highest home prices in the
nation.  That $202,834 in upfront costs,
Zillow points out, is more than typical home purchase prices in 11 of the
markets they track. What is most interesting about the Zillow information is how
narrow the ranges are for the other expenses.

The range for closing
costs range is almost exactly $2,000 above and below the national average with
one major outlier.  Closing costs in New
York City average $11,232.  The differential
is even smaller when it comes to moving-in costs. There is only $430 between
the lowest cost – $890 in Las Vegas, to the highest in Minneapolis/St. Paul.

So, bottom line, it
costs the most to move into a home that costs the most, and that is all about
the downpayment. Still, the other costs may well come as an unpleasant surprise
to homebuyers, especially first timers.  

“Buying a home, especially for
the first time, is an exciting but stressful experience,” said Justin
LaJoie, RealEstate.com General Manager. “Some of that stress can be eased
by making sure you know all of the costs that come with buying and owning a home,
so you can budget appropriately and not get caught off guard well into the
buying process.”

“It’s imperative first-time
homebuyers do their research around unexpected homeownership costs, including
projects that help them prepare for the big move,” said Thumbtack Lead
Economist Lucas Puente. “While there may be some initial sticker shock,
these projects can help get a house move-in ready.”



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