Cost of Home Maintenance?
I often get asked how much home maintenance “should” cost. Of course a Saturday preventive maintenance program preserves the value of your home, and extends the life of your systems. A comprehensive maintenance program also saves money by keeping small issues from becoming large ones. So let’s plan an annual budget for the small ongoing repairs. Average homeowner costs can be helpful, but averages are only a starting point for your home's annual maintenance budget and don't take into account your unique circumstances. You must calculate the personal factors that may increase or decrease your maintenance costs on an annual cycle, including the location and age of your home, the weather in your area, and the home's general condition. In this post I will break down the best formula for getting your annual budget.
According to National Association of REALTORS, in the summer of 2020 the national average sale price for an existing home in the U.S. was $280,000. The latest report from Home Advisor states home homeowners spend an average of $2,100 on annual maintenance, and more than 30% were forced to complete an emergency repair at some point during the year (with emergency repairs costing an average of $2,000-$5,000 in additional budget).
Step 1: The 1% Rule
Calculating average costs gives you a starting point for building your home maintenance savings budget, and real estate rules-of-thumb can provide additional guidance. One popular rule says that 1% of the purchase price of your home should be set aside each year for ongoing maintenance. For example, if your home costs $800,000, you should budget $8,000 per year for maintenance.
This popular rule has its limitations, of course, as market fluctuations can dramatically impact home prices, without accounting for the general condition of homes within the market. If you bought your home at the peak of a housing bubble, your maintenance costs wouldn't be dramatically higher than if you bought at the bottom (although the price of materials and labor do inflate and deflate with real estate trends).
The underlying price of your home and its repair costs, in other words, are independent variables. The 1% rule provides a safe estimate for maintenance savings and considers the market, the physical size, and overall condition of your home at the time you purchased it.
Step 2: The Square-Foot Rule
Another practical estimate is to budget $1 per square foot for annual maintenance and repair costs.
This rule is slightly more consistent than the 1% rule because it's directly related to the size of the home. The more square feet you’re managing, the more you’ll need to spend—but keep in mind that this rule doesn’t take into account the specific cost of labor and materials in Bergen County. The market prices for contractors and building materials can vary significantly from region to region.
Step 3: Fine-Tuning Your Calculation
A home built within the past decade will likely need less maintenance, while homes built 40 to 80 years ago will need slightly more. When maintaining an older home, there’s a statistical likelihood that major structural components, such as the roof, siding, or plumbing, will need maintenance or replacement in the future.
For example, according to the International Association of Certified Home Inspectors, sealants and stains can last anywhere from three to eight years, cultured marble countertops have an average lifespan of 20 years, and carpeted flooring will only hold up an average of eight years.
Homes in climates affected by large variations in temperature and humidity, ice storms, or heavy snowfall are subject to more strain than homes unaffected by cold weather. Similarly, homeowners living in climates that experience high winds, heavy rains, and other extreme weather conditions should expect greater environmental attrition on their structure.
A home maintenance budget should also consider as many topographical, geological, and biological variables (such as adjacent floodplains, trees, or termite infestations) as possible.
The older the home, the more impact a previous owner’s care (or lack thereof) will have on the home's annual maintenance budget.
The Formula
First, take the averages of the 1% rule and the square-foot rule; if 1% of your purchase price equals $8,000, and the square-foot rule equals $3,500, then your average is $5,750.
Next, add 10% for each factor (weather, condition, age, location, type) that adversely affects your home. If you have an older home, in a floodplain, and in an area that experiences freezing temperatures, increase the total by 30%: $5,750 x 1.3 = $7,475 (or $622.92 per month).
Fun Facts
Short Hills NJ has the 5th highest average cost of home maintenance in the country at $26,453 per year.
Average frequency of repair ranked from most to least expensive
Repair Roof 10.0 years
Repair Subfloor 7.8 years
Water Damage 5.2 years
Regrout Shower 4.7 years
Regrout Floor 6.0 years
Rewire Electrical 11.4 years
Refinish Stairs 7.1 years
Replace Water Lines 9.4 years
Refinish doors 6.3 years
Replace Pool Heater 7.7 years
Pool Refinishing 6.9 years
Replace Pool Water Filter 3.2 years
