Costs of Ownership

When buying a home for the first time, many new homeowners make the disturbing discovery within the first year that it’s costing them much more to own a home than they had originally calculated. This is because, while everybody tends to focus clearly on what the mortgage payment (principal and interest) will be, many people neglect to plan for taxes, insurance, utilities, and maintenance.

Property Taxes

are due twice a year, in February and November. They are generally paid in 6-month installments, unless you make an arrangement with your mortgage holder to pay a monthly tax installment along with your mortgage payment. It’s a good idea to calculate your tax total for the year, divide it by 12, and deposit that amount into a savings account each month so you will be prepared when the installment comes due.

The tax bill for an individual property is assessed largely on sales price, but also includes assessments that are unique to that street, neighborhood, district, city or county. When you buy a home, you will be able to view the current tax bill for the property, but it will take the county tax assessor a few months to generate the new, adjusted bill. (Yes, you will have to pay the difference retroactively.) For purposes of budgeting, I recommend that you use the following guidelines:

Annual property tax bill, as percentage of sales price

  • Oakland/Piedmont: 1.4
  • Berkeley: 1.7
  • Albany: 1.3
  • Kensington: 1.25
  • El Cerrito: 1.25
  • Richmond: 1.25

Property Insurance

(called hazard insurance or fire insurance) is due once per year, with the first year’s premium due at close of escrow. A typical policy costs in the range of $800 – $2,500 per year. Most people elect not to obtain a special policy for earthquake coverage, but if you do choose earthquake coverage, your premium may be roughly doubled.


include water, garbage, communications services (phone, cable, satellite dish), and alarm system, as well as gas and electric. Costs of utilities vary greatly by property, and I recommend that during the escrow period you obtain information about the current owner’s typical expenses, and budget accordingly.


is something that every home needs, even those that appear to be in perfect condition upon purchase. Your roof will eventually need replacement, as will your furnace and water heater. You may need seismic upgrades. You will need to paint and seal the exterior periodically, clean the chimney and gutters, repair plumbing leaks, and maintain fences and landscaping. Your appliances will not last forever, your windows will crack, and your hardwood floors will wear. This is all a normal part of home ownership, and if you plan ahead it will not be burdensome. I can help you budget an appropriate amount to put aside for maintenance, depending on the particular home you buy.

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