What a House Costs After You Leave It
Over seven years of repairs he found about US$36,000, which is close to US$5,000 a year.
Picture a couple named Marta and Ed, both 65. Their house is paid off and worth about US$500,000. They plan to spend six months of each year abroad. Ed said, "The house is free now. We lock the door and it waits for us."
Marta was not so sure. She asked Ed to add up what the house takes in a year. Ed keeps every receipt, so he started with those. Over seven years of repairs he found about US$36,000, which is close to US$5,000 a year. That covered a water heater, a roof patch, two sections of fence, furnace service and paint.
Then they added the rest.
| A year of the house, empty or full | US$ per year |
|---|---|
| Property tax (0.9% of value) | 4,500 |
| Insurance | 3,000 |
| Repairs and upkeep (1% of value) | 5,000 |
| Subtotal | 12,500 |
| Utilities kept on, plus a security check | 2,400 |
| Total | 14,900 |
Ed looked at the total for a while. "That cannot be right," he said. Marta checked each line twice. It came to about US$1,240 a month for a house nobody lived in for half the year.
Now stretch it over 20 and 30 years
The first three lines, tax, insurance and upkeep, add up to 2.5% of the house's value each year. Over time that grows into a large share of the house. Because costs differ so much from place to place, Marta and Ed looked at a low case, a middle case and a high case.
| Case | Per year | Over 20 years | Over 30 years |
|---|---|---|---|
| Low (1.5% a year) | US$7,500 | 30% = US$150,000 | 45% = US$225,000 |
| Middle (2.5% a year) | US$12,500 | 50% = US$250,000 | 75% = US$375,000 |
| High (4.4% a year) | US$22,000 | 88% = US$440,000 | 132% = US$660,000 |
These figures hold prices and rates flat. Prices usually rise, so the real totals could be higher. A new roof, a new kitchen or a new bathroom is not included. Adding the utilities and security line to the middle case brings the 20-year total to about US$298,000, which is 60% of the house.
The other side of the page
Marta noticed that the table said what the house costs and not what the alternative costs. If they did not own it, they would still need a home for the six months they are here. So she priced a home like theirs to rent, at US$3,000 a month plus about US$200 for utilities, and a one-bedroom at US$900 plus about US$150. She left out the six months abroad, since that is the same either way.
| Six months at home, per year | Keep the house | Sell, rent a home like it | Sell, rent a one-bedroom |
|---|---|---|---|
| House costs | −US$14,900 | 0 | 0 |
| Rent and utilities, 6 months | 0 | −US$19,200 | −US$6,300 |
| Income from the sale money (US$470,000 at an assumed 4%) | 0 | +US$18,800 | +US$18,800 |
| Result | −US$14,900 | −US$400 | +US$12,500 |
Keeping the house costs US$14,500 a year more than renting a home like it, and US$27,400 more than renting a one-bedroom. That is the price of the house, with its garden and the bedroom that waits. It is also the price of owning one home and not two, since the 4% and the selling costs come from the same sale. The 4% is an assumption, and markets vary.
One call Marta made
Marta phoned her insurer. Many policies have a clause about homes left empty for 30 to 60 days, and a separate vacant-home policy can cost about half again as much. Policies differ, so she asked what her policy said and what extra cover would cost. The answer changed her number.
In another story on this site, Rosa and Kent found a similar share, about 2.8% of their house each year. The details differ and the result sits in the same range.
You could…
- Add up your own last three years of tax, insurance and repairs.
- Ask your insurer what happens if the house is empty for two months.
- Price a home like yours to rent for the months you are here, and set it beside the house's yearly total.
What was your yearly number, and did it surprise you? Tell us in the comments. Someone reading may be about to add theirs up for the first time.
Figures are estimates for planning, based on public data.
Sources: public averages for US property tax (about 0.9% of value), homeowners insurance, maintenance rules of thumb (1% to 4% of value) and vacant-home insurance guidance. All figures are illustrations for a US$500,000 house.
Tell us in the comments