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The hidden costs of home ownership

Is it really cheaper to stay in your house?

Created date

June 28th, 2016

Before trading their condo for an apartment home at Cedar Crest, an Erickson Living community in Pompton Plains, N.J., Leo and Elaine Thomas did their retirement research. They compared living costs to see which option would be most budget friendly.

“We felt the costs were comparable and slightly more attractive than living in our condo,” Leo says. “Because of that and the upkeep costs we’d be saving, we felt it was a positive move.”

Like many of his neighbors, Leo made an important discovery by listing all the costs of home ownership: Home maintenance costs, as well as all the other hidden costs of owning and caring for a home, can add up to more than you expect.

Calculate all costs

“When you really list out all of your living costs, many people discover that living in their house, condo, or townhome is more expensive than they thought,” says Cedar Crest Sales Counselor Ruth Phillips. “Plus, it’s a lot of work.”

When calculating the actual cost of owning your home, don’t forget to add 1% to 4% of your home’s value for repairs and routine maintenance, property taxes (which average $8,000 in New Jersey), and homeowner’s insurance premiums. 

The National Association of Insurance Commissioners reports the average U.S. home owner’s insurance premium as $1,034, but check with your insurance company. 

Research financial structures

Once you’ve determined the total cost of living in your home, research other retirement living options. “You might be surprised,” says Cedar Crest Sales Counselor Kate Tanis.

For Leo and Elaine, Cedar Crest was the best value and most reliable financial structure because it offers peace of mind and predictability.

A refundable entrance fee secures your apartment and protects your nest egg, while a monthly service package covers your living expenses. So instead of juggling a stack of bills each month, you write just one check. Full details are available in Cedar Crest’s Residence and Care Agreement.

The predictable monthly service package, which corresponds to the size of each apartment home, includes all home maintenance, professional landscaping, property taxes, 24/7 security, utilities, a flexible meal plan, and use of all amenities, like the indoor pool and fitness center. It also includes snow-clearing services in winter and year-round transportation to and from local destinations like the grocery store and doctors’ offices. 

And when it comes to property taxes, that’s just one more huge expense Cedar Crest residents worry about less.

New Jersey and neighboring New York claim the top two property tax rates in the nation. In 2015, Bergen and Essex Counties topped $11,000 per household compared to a national average of just $1,000. Passaic and Morris Counties also exceeded $9,000.

At Cedar Crest, the monthly service package also includes each apartment home’s portion of property tax, which is divided among all residents based on apartment size and days of occupancy. This way, the tax is spread out over the entire year instead of cut into three large quarterly payments. 

Additionally, because residents are choosing a more manageable living space, their bill will be significantly smaller in most cases than if they still lived in a large house. 

The bottom line: “Expenses are more predictable,” says Leo. “It gives us an opportunity to plan for potential trips we like to take.” 

He says he doesn’t have to worry about the hot water heater or furnace breaking because those costs are covered. 

And when they’re gone, Leo and Elaine travel worry-free thanks to Cedar Crest’s 24/7 security team keeping an eye on things. When they’re at home, they have     peace of mind knowing that all security staff are trained EMTs and can respond to medical emergencies within minutes. 

“It’s difficult to put a dollar value on living at Cedar Crest,” says Phillips, “but when you meet with Kate Tanis or me, we’ll help you list out those costs and pros and cons so you can decide what the best choice is for your retirement.”