For those who enjoyed the 3-part series on Hard Lessons About Buying My First Home, I am back with more transparency about this topic. When people talk about homeownership, a sort of glorification comes with it—like all of your financial problems are solved because you’re now contributing towards your own mortgage instead of someone else’s (a common argument against renting).

However, beyond the pros of owning a home, there is a lot of complexity and additional costs that come with it. Today, I am going to share 5 not-so-common considerations for those of you who are looking to buy your first home.

Note: These estimations are based on personal experience from buying a home in Calgary, AB, Canada.

Property Tax

When you become a homeowner, you’re expected to pay property tax based on your home’s assessed value. Although the tax rate fluctuates a bit every year, it does climb over time. If you don’t pay it on time, you will need to pay a penalty on the unpaid balance. Depending on how big your home is and where it is located, you can expect to pay a few hundred dollars every month.

Utilities

With a larger home, you will be consuming more water, electricity, and gas. For example, when my family moved from a duplex (approx. 1,300 sqft) into our bigger home (2,000+ sqft), we saw a big spike in our electrical bill since we constantly turned up the heat because the house felt so cold.

Insurance

According to Rate Hub, Canadian renters apparently spend approx. $25/month on tenant insurance. I will share with you that home insurance is way more! Depending on what type of coverage you select, you can expect to pay approx. $150-200 (make sure you get different quotes and negotiate). Oftentimes, providers will offer you a discounted rate if you combine your home and auto insurance.

Maintenance

As a homeowner, you’re fully responsible for fixing any problems after the warranty periods are up, including when appliances break down. Depending on how old your home is, you may need to replace items such as the water heater (and figure out whether you want an electric or gas one). Since you never know when these problems can happen during the life of your home, make sure you set aside another few hundred dollars per month to cover these potential expenses as they can be costly.

Life & Career

With the flexibility of remote work opportunities, it is more likely that you can work from home, which means that finding a home with more space makes sense. However, you may also be open to relocation—like me—and owning a home in another country could make your taxes more complicated each year (I am currently dealing with this 😅). There’s also the type of lifestyle you want to live because the most financially responsible decision isn’t always the most glamorous.

To rent or own?

As a homeowner, you’re building equity over time. If you believe the housing market will go up, then it may be worth all these extra expenses. For example, in one of the suburban neighbourhoods that I was eyeing, the home prices rose over $100K within a year! Keep in mind, this was during the pandemic (aka not normal times).

However, you should also consider the extra stresses of owning a home as it can take up a lot of your time to deal with them every year. These headaches may not be worth your time if you don’t plan on staying in a home for that long.

There’s also the opportunity cost of owning a home. Above, I listed 4 additional considerations that could add at least another $1K to your monthly fixed expenses. If you invested this difference into the S&P 500 over the next 10 years, you could potentially make $100K+ assuming a 12% return and 2% inflation based on the 10-year average return.

Good luck!

Wherever you are in the home buying process, I hope this blog post helped put some things into perspective. As with any decision in life, there are pros and cons to owning a home. Despite all of these complexities, I don’t regret buying a home (at least not yet) because I am optimistic about Calgary’s potential and believe that its housing market will continue to rise because:

1. It is still very affordable compared to places like Toronto and Vancouver and is more desirable to live in than other Canadian cities because of its cleanliness, low taxes, and proximity to the great outdoors and Rockies
2. Calgary’s economy is slowly but surely moving away from its heavy reliance on the energy sector, which means more industry growth and job opportunities
3. It’s for my family! Living in a big home was my Mom’s dream so I am glad to help her realize this ❤️

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