Many Chinese people misunderstand that the cost of owning a home in the United States is very high. This misconception arises from various reports in newspapers or magazines that mislead the public into believing that homes in the U.S. are affordable but unaffordable to maintain. In reality, as long as you can afford to buy a home, you should be able to afford to maintain it. Many clients of WorldWay Investment Immigration have inquired about related issues. Strictly speaking, the only real holding cost of owning any property in the United States is property tax.
Property tax varies across different states and regions in the United States, generally ranging from 1% to 3%. In California, it is typically between 1% and 2%. In newly developed areas, property taxes may be higher. With the current average home price in California being around $300,000, the annual property tax ranges from $3,000 to $6,000.
Homes in the United States are usually categorized as single-family homes or townhouses (row houses). Besides property tax, what other potential expenses might arise?
1. Home Insurance
In California, for a typical home priced between $300,000 and $500,000, the annual home insurance premium usually ranges from $600 to $900. Due to the frequent occurrence of earthquakes in California, earthquake insurance is purchased separately. Other states may also have natural disasters, such as tornadoes or floods. If you want your home to be protected, you need to purchase home insurance. Many people do not buy insurance when purchasing homes in their home country, as the concept of insurance is not prevalent. Ultimately, whether to buy insurance is your own choice, but if you need a mortgage, the bank will require you to purchase insurance before approving the loan.
2. Yard Maintenance
For example, lawn mowing in California costs about $50 to $60 per month. However, more than half of households in the U.S. own a lawnmower, which costs around $200 to $300. Many choose to mow their own lawns for exercise and savings. Most American residents prefer to do it themselves unless they are particularly busy or do not have younger family members at home.
3. Community Fees
If you purchase a townhouse (row house), there will be a community fee (known as property management fee in China), which typically ranges from $150 to $350, depending on the number of public facilities in the community. The community fee usually includes a portion for fire insurance, which does not need to be purchased separately by each household. Since the homes are connected, if one house catches fire, others may also be affected, so the fire insurance is shared among them.
In the U.S., when applying for a mortgage, lenders will calculate whether you can afford the home by including property taxes and community fees. Generally, your total housing expenses, including mortgage, utilities, and community fees, should not exceed one-third of your salary, and during peak housing prices, it should not exceed one-half. If your salary is $6,000 per month, it would be reasonable for your combined mortgage and property tax payments to be between $2,000 and $2,500. This way, owning a home will not make you a "house slave," and you can comfortably cover other living expenses.
Recently, clients of WorldWay Investment Immigration have inquired about the annual holding costs of owning a home in the United States. Here is a practical example:
A client purchased a single-family home (villa) in Chino Hills, California, with 4 bedrooms and 3 bathrooms, covering 231 square meters. The sale price was $540,000. The property tax rate is approximately 1.26%, which amounts to $6,804 annually, paid in two installments every six months. Including fire insurance, the total annual cost is about $700, making the average monthly holding cost for this client approximately $625.
