It’s not about the weather; it’s more about where you live or work. Counter-intuitively enough, when U.S. buyers are looking at real estate in less expensive areas, a crucial, hidden cost may be the utility bills for the property.
Those are the findings of a study – Covert Costs: Utilities Are the Hidden Cost of Housing – – released late last month by online real estate site Trulia’s Housing Economics Research Team, which partnered with UtilityScore to execute a nationwide survey on how much of the monthly budget utility bills represent in single-family homes.
The researchers used utility costs as a percentage of home value in order to measure monthly housing costs for both renters and owners. Other variables were considered too – insurance, taxes and mortgage interest, among them. Where noted, the team used estimates of those expenses to arrive at overall monthly costs.
Among the highlights of the research findings are the following:
- Nationally, based on data from UtilityScore, people in single-family homes spend a median of $2,715 annually ($226 monthly) on utilities, or $1.68 on a square-foot basis, or 1.4 percent of the median single-family home value.
- Utilities represent the hidden cost when buying or renting a single-family home in Georgia. The median annual utility cost for the state is the highest nationwide in dollars, at $4,347, as a proportion of single-family home values at 2.9 percent; and the second-highest on a per-square-foot basis at $2.48 (after Hawaii at $2.57).
- Of the largest 100 metro areas, Atlanta has the most expensive median annual utility costs by dollar amount at $4,353, and is in the top 10 on both a price-per-square-foot basis ($2.31) and as a percentage of home values (2.6%).
- El Paso, Texas, came in with the least expensive median annual utility cost, at $1,818; and with the sixth-most inexpensive on a price-per-square-foot basis at $1.28.
- Of the top 20 most expensive zip codes by median annual costs, most are in Arizona and coastal California.
- Climate is not a good predictor for how much median utilities cost at the zip-code or metro level.
The findings suggest is that, if you are buying or renting a si-family starter home, depending on where you live, utilities could have a big impact on overall affordability– in some cases even between zip codes that border each other.
Owners and renters of single family homes who reside in areas where home values are low – such as Detroit and Pittsburgh – may pay just as much for utilities on average as they do for their mortgage or rent payments.
For residents in the most expensive metros areas– for example, San Francisco and Honolulu – on the other hand, utilities are just as high in dollar amounts, but look trivial after getting past monthly housing costs.
Finally, the researchers were surprised to find that there is no significant correlation between climate and median annual utility amounts. Assuming that 72 degrees (Fahrenheit) is a comfortable temperature for most people and looking at the deviation in average temperature from 72 degrees at various times of the year in each metro area, the places with the largest deviations do not have higher annual utility bills than those with very small deviations from comfortable temperatures.