In all the excitement surrounding buying a home in The Garden State, the hidden and ongoing costs that come with ownership can see you paying a much higher price than mere market value.
With New Jersey officially named the second-best state to live in the United States due to its high-performing schools, modest debt-to-income levels among its residents, and vibrant seaside, suburban median home values have jumped by 86% in parts of it. This is exactly double the 43% increase New York City has seen.
And while your initial outlay for purchasing your new home here will be between $40,500 and just over $140,000, it’s possible that hidden costs will rack up the amount you’re spending on your house by tens of thousands of dollars.
That’s why it pays to look behind the listing price and make sure you’re aware of the extra expenses you’ll most likely face when you own a home in Jersey.
Home Improvements and Renovations
Maybe you’re looking for better comfort, want to increase your home’s value, or hope to lower your energy bills. Whatever your motivation, renovations can come with hidden costs that aren’t always apparent when you first budget. Even with a detailed quote from your contractor, the scope of work may not become clear until walls, floors, or ceilings are opened up.
As the third-oldest state in the USA, there are a lot of period and vintage homes in this part of the country. This means that once demolition begins, you could uncover expensive surprises such as foundation cracks, termite damage, rotting framing, and water-damaged subfloors. Bringing these issues up to standard can dramatically increase your materials and labor costs, especially if the problem has been hidden for years.
Remember to allocate enough funds when considering major changes to your NJ property. A good rule of thumb is to earmark 10% to 30% of your home’s current market value and keep at least 10% extra available for any quoted work. Having this financial buffer means an unexpected repair is less likely to derail your renovation or force you to compromise on the work you originally planned.
Maintenance and Repairs
Routine maintenance in NJ costs homeowners between $3,700 and $8,200 a year. One reason for these costs is that labor and materials in this state run almost 20% above the national average because nearly all materials must be imported, including sand and stone.
The goal here is to be prepared when these expenses crop up, which they will.
- Automate a fund, moving your money into a separate savings account each month so you don’t have to rely on credit cards because of an emergency.
- Track your home systems, listing big-ticket items like your furnace, HVAC systems, and water heater. Make sure you know how old they are so you can plan ahead for when you need to replace them.
Your homeowners insurance is also a valuable resource when your home needs repairs, as it generally covers water damage caused by faulty or damaged plumbing, water heaters, appliances, and heating or cooling systems. These costs can arise when you least expect them, and with the right coverage, you won’t be left paying for them out of pocket. Check your policy to see what you are covered for, and if necessary, update it for added peace of mind.
Utilities and Property Rates
You’ll definitely need to adjust your expectations to the stark facts of reality when it comes to how much you’re going to be paying for the utilities in your new home. You’ll more than likely be facing higher electric bills than you’ve been used to, an increase in water costs, and additional gas bills.
Counteract these by closing unused areas in your house to make the heat count, binge-baking, where you bake as many foods as you can together to reduce how often you turn the oven on, and washing clothes in cold water.
Property rates are also a hidden cost that can sneak up on homeowners. New Jersey already has the highest property taxes in the US, with the average tax bill sitting at around $10,000. These taxes increase annually, as rising costs keep residents paying more each year. While there is nothing you can do to prevent these increases, factoring them into your budget from the outset can help you avoid an unpleasant surprise when your property tax bill arrives. You can also save a little extra every year to accommodate the increase.
HOA Fees
While not every home is part of an HOA, these associations are common in New Jersey. In the state, homeowners association fees average more than $400 a month, which could leave you paying as much as $5,000 yearly for services like garbage collection. This amount also doesn’t include inevitable fee increases, and NJ doesn’t have a specific legal cap on them.
You may also need to factor in the cost of capital improvements assessments, like building expansions, constructing a detached storage shed, installing solar panels, or adding security cameras to your property.
The best way to budget for current and future HOA fees is to set aside 1% of your home’s value yearly to cover all your bases. Let’s say your home cost $550,000. This means you’ll need to put away $5,500 annually, or roughly $460 a month, to make up the shortfall when unexpected circumstances arise.
It All Adds Up
Once you’ve faced the reality of the hidden costs of New Jersey homeownership, you may find that your home still remains one of your most fulfilling investments. The best way to handle these unexpected costs is to broaden your understanding of what homeownership entails. Along with the potential for personalization and long-term wealth creation, you gain stability and security in exchange for ongoing expenses that you can budget for.
Lifelong Jersey resident and Rutgers and FDU alumnus, Tom La Vecchia is publisher of New Jersey Digest, one of the state’s leading lifestyle media brands. When he’s not growing the Digest, he’s raising four kids, wrangling four cats and pretending it’s all under control. His mission: keep Jersey interesting and impossible to ignore.
