Everyone knows that buying a home involves coughing up a terrifyingly huge wad of cash. That’s to cover your down payment (tips here), 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 this study, new home buyers tend to spend an additional $4500 to $10,601 compared to similar non-moving homeowners on things like furniture, appliances, and repairs.
Where does this money go?
New home owners are excited about their new home, and they want to make it perfect, splurging on a new couch or an updated stove. 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.
Here’s a snapshot of some other expenses that, on average, new homeowners will rack up during their first year.
- Sofa: $2000
- Living room chairs and tables: $687
- Bedroom furniture: $1000
- 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 newhomes (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. So, 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.
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.
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).
The good news is that this uptick in expenses typically only lasts for the first year, so buying a home a still a great investment in the long run – even if it does inspire you to splurge on a pricey new couch.