Homebuyers See Extra $15,000 in Costs Beyond Mortgage

The Hidden Cost of Homeownership

In today's competitive housing market, first-time homebuyers are facing a slew of unexpected financial challenges that are putting a strain on their budgets. A recent study by Clever Real Estate has shed light on the true cost of homeownership, revealing that the average buyer in the United States can expect to spend a whopping $107,230 in upfront expenses.

Surprising Expenses Beyond the Home

The study found that the majority of these unexpected costs are not directly related to the home purchase itself. In fact, the data shows that the largest expenses for new homeowners include:

• Repairs and renovations: $13,498
• Furniture, fixtures, and appliances: $6,446
• Moving costs: $2,670

These ancillary expenses, combined with closing costs, concessions to sellers, and other fees, are catching many first-time buyers off guard. Nearly half (48%) of respondents said the true costs of homebuying were higher than expected, with 39% exceeding their initial budget and 38% reporting impacts on their savings.

Age Disparity in Preparedness

Interestingly, the study also found a significant divide between age groups. While 63% of first-time buyers were surprised by the expense, the number was even higher among Gen Z homebuyers, with 49% exceeding their budget - a rate over 1.5 times higher than Baby Boomers (31%).

This suggests that younger, less experienced buyers may be underestimating the true financial burden of homeownership. As a result, they are finding themselves in a precarious position, forced to compromise on their priorities in order to stay within their budgets.

Buyers Gain Leverage

Through Negotiation However, the news is not all bleak. The study also revealed that buyers are becoming savvier when it comes to negotiating with sellers. More than half (52%) of respondents reported negotiating, and an impressive 94% of those were able to bring down costs. Additionally, the data shows that 34% of buyers paid below the asking price in 2024, up from 27% in 2022.

This shift in market dynamics suggests that buyers are becoming more assertive in their approach, recognizing the need to offset the growing financial challenges they face. By leveraging their negotiating power, they are able to gain a more favorable position and potentially mitigate some of the unexpected expenses.

Ongoing Challenges in the Housing Market

Despite these efforts, the challenges facing first-time homebuyers are far from over. The recent National Association of Realtors (NAR) settlement has the potential to add an additional $12,944 in commission costs for the average-priced home, further compounding the financial burden.

As the housing market continues to evolve, it is crucial for first-time buyers to be proactive in their approach, thoroughly understanding the true costs of homeownership and exploring every avenue to secure the best possible deal. By doing so, they can overcome the obstacles and achieve their dreams of homeownership.