Just Bought a New Home? Prepare to Shell Out an Extra $10K

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Everyone knows that buying a home involves coughing up a terrifyingly huge wad of cash. That’s to cover your down payment, closing costs, moving—simply put, you go through a lot of dough when you’re closing a deal. Once you’re finally settled into your new abode, it’s logical to breathe a sigh of relief and think, “Whew! We made it. Now we can hunker down and make some meals in our awesome new kitchen and stop hemorrhaging money!”

Sorry to break it to you, but your spending spree has just begun.

According to a study from the National Association of Home Builders, in the first year after buying a new home, homeowners cough up a bunch more money on furniture, appliances, and home repairs. How much exactly? We’re talking an additional $10,601.

So we hope you’ve got some leftover funds. So where exactly does all that money go?

How new home buyers spend their money

Most new homeowners are giddy about sprucing up their place—and that means purchasing more stuff, including major appliances.

But often the owner has little choice in the matter. One survey by Home Innovation Research Labs shows that while virtually all homes built in 2015 include stoves, over one-third lack refrigerators and more than two-thirds lack clothes washers and dryers.

“That surprised me,” says study author Natalia Siniavksaia. “You would think that when you buy a new home, everything is there. But apparently no.”

Here’s a snapshot of some other expenses that, on average, new homeowners will rack up during their first year.

• Sofa: $724
• Living room chairs and tables: $687
• Bedroom furniture: $634
• Clothes washer and dryer: $575
• Lawn mower/other yard equipment: $515
• Dining room and kitchen furniture: $345
• Power tools: $232
• Refrigerator or freezer: $183
• Bedroom/bathroom linens: $180
• Modular wall units, shelves/cabinets: $144
• Patio/porch/outdoor furniture: $159
• Curtains and drapes: $56

Buying an older home? Watch out

The $10,601 in expenditures applies specifically to buyers of new homes (meaning those built in 2012 or later). Buyers of older homes (those built before 2012) spend a bit less during that first year of ownership, at $8,233. Unlike owners of new homes who spend the majority of their cash on furniture and appliances, owners of older homes funnel the lion’s share of their budget toward something else entirely: home improvements and repairs.

Because, after all, in older homes, boilers break, kitchens start looking dated fast.

“These buyers make a trade-off,” says Siniavksaia. While older homes typically cost less than new ones, maintenance and repair issues tend to crop up more often that take time and money to fix.

Here’s a sampling of where the money goes during that first year after buying an older home. As above, these are averages.

• Bathroom/kitchen remodeling: $395
• New fence: $199
• Painting: $188
• Plumbing repair: $122
• Replacement of siding/roofing: $115
• HVAC replacement: $76
• Addition of deck/porch: $75
• Addition of garage/carport/shed: $29
• New window and/or skylights: $20
• Repair driveway or walk: $29

How home buyers can prepare

All in all, the takeaway lesson is, whether you buy old or new, you should make sure to have a stash of cash at the ready for all the things you’ll want—or need—to fix, upgrade, or maintain once you’ve moved in.

“Additional spending after the home purchase is almost inevitable, yet it’s rarely discussed,” points out Cedric Stewart, a real estate agent with Keller Williams based in Washington, DC. “The pride of ownership and excitement for new homeowners often compel them to fill each room with their personal touches. This usually comes at a price. That’s why it’s prudent for home buyers to make a list of items they know they want and price them out. It’ll help them avoid surprises and prioritize postsettlement spending.”

Another rule of thumb? “Homeowners should plan to spend 1% of their home purchase price on emergencies and repairs each year,” says Brad Hunter, chief economist at HomeAdvisor. According to one of the company’s surveys, the top four projects that homeowners wish they’d saved for are blocked pipes ($275), water leaks ($2,068), clogged drain ($199), and broken AC unit ($320).

But you can also take comfort in knowing that after the first pricey year of homeownership, expenses should die down somewhat. Typically, “this elevated spending only lasts for a single year,” Siniavksaia points out. And home buying remains the best way for most people to accumulate wealth.

In other words, in the long run, owning a home is well worth it—even if it inspires you to splurge on a new couch.

The post Just Bought a New Home? Prepare to Shell Out an Extra $10K appeared first on Real Estate News & Insights | realtor.com®.

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