Utility Costs for Apartment vs Homes

It goes without saying that your utility costs can be overwhelming. However, what’s the difference between utility costs of homes vs apartments?

Whether you rent or buy a home, the cost of your utilities is often different for houses and apartments. If you’ve decided that renting is the better option for you, the next step is to find out what type of home you prefer. Choosing between renting a house and renting an apartment often means choosing the location where you’d like to live. Looking at the total cost of renting an apartment vs a house, apartments are often a more affordable option.

According to statistica.com, about 43% of American renters live in single-family homes, followed by apartment buildings with five or more units (36%). While there are many differences between renting and buying a home, there are also some factors to consider when it comes to renting an apartment or a house.

Cost Factors for Utilities in Apartments and Houses

When searching for a home, ideally you’d compare the same size apartment and house, based on your needs. Realistically though, you’re probably looking at a certain location or area to rent. Usually, if you’re searching for a place in a downtown or an urban environment, you’re likely looking for an apartment while you’ll find more houses in suburban or rural areas.

As apartments typically come with more amenities than houses and are often in more desirable locations, they can be more expensive than single-family homes. As a result, you’ll most likely be looking for an apartment with less square footage than a house. At the same time, many things are free in urban centers that are often unavailable in suburbs or rural areas and you often have more options to choose from when picking a utility company, Internet or cable service provider and more.

In 2018, the average size of an apartment in a multifamily unit was 941 square feet, while new single-family homes had a median size of 2,386 square feet. Houses typically offer more living space and more rooms than apartments. Not only does more space come with higher rent but also higher utility bills.

Here are the main items to look at when weighing the cost of renting an apartment or a house:

Rent

The most obvious cost for both, apartments and houses is the monthly rent. When you rent an apartment, the price of the rent may include some utilities such as water, garbage collection or heat. Some apartments even have Internet or cable television included. When you rent a house, you're typically responsible for all utilities, as well as for internet and cable.

Utilities

Comparing the utility expenses of a house and an apartment can be tricky. In most cases, apartments come with lower utility bills than houses if they’re not already paid for with the rent.

Gas and Electricity

In general, utility expenses are your electricity, gas, water/sewage and garbage disposal bills. The biggest utility bills in most American households are the electric and gas bills.

As utility costs vary depending on your location, another factor is the size of your home. The bigger size of a house increases the cost to cool your home in the summer and heat it in the winter, driving up your electric and/or gas bills. At the same time, the ratio of outside walls to living space is significantly smaller in apartments, making it cheaper to heat and cool it, even at the same square footage. This is especially significant if you live in an under-insulated home. (About 90% of American homes do.)

Water and Sewage

While the average American uses about 80-100 gallons of water per day, single-family homes use the most water of any utility customer sector in North America, according to the Water Research Foundation (WRF).

Water prices in the United States are low and vary depending on your location. Your water bill is based on your usage. Since houses often come with a yard, land, vegetable garden or even a pool, water bills are significantly higher for single-family homes. A study by the WRF suggests that 58% of water is used for outdoor purposes.

At the same time the cost for sewage is based on your water bill and increases with your water usage. Water and sewer are often included in the rent for apartments and should be added to the rent payments of a house in order to be able to compare the two.

Trash and Recycling

Curbside pick-up for garbage, recyclables and organic waste is typically priced according to the type of waste and varies depending on your location. Your city or county sets the rates, which are generally based on the cost to dispose of the waste. The higher density of pick-ups and the shorter hauls in urban centers makes the actual cost of garbage disposal cheaper in cities. Therefore, the cost is typically higher for houses than for apartments. In average, city dwellers generate far less domestic waste, which can reduce the frequency of your garbage pickups and save you money.

Internet, Cable and Phone Services

Whether you choose to have Internet or cable connected is up to you. If you decide to go with these services, you may be paying less in an apartment as compared to a house. As more service providers with more options are available in urban centers, you’ll probably find a cheaper offer living in an apartment. You typically have much faster Internet connections in an apartment downtown than in a house in the suburbs. This is especially important if you’re using streaming services instead of cable.

Renter’s Insurance      

Whether you’re renting an apartment or a house, you may want to buy renter’s insurance. Some landlords may require their tenants to have renter’s insurance as part of the lease agreement.

Renters' insurance covers the possessions inside your home that may get lost or damaged. To determine the actual cost, the insurer considers the risk taking into account your claim history and credit score. The type of building you live in can also affect your rate since single-family homes are bigger targets for burglars than apartment complexes, making insurance more expensive if you’re renting a house.

Location

The most important difference between an apartment and a single-family home is typically the location. Since apartments are usually centrally located in urban centers, they tend to come with free amenities around them. The neighborhoods are walk-able, and often have easy access to public transportation, local attractions and businesses. This makes the cost of transportation cheaper for apartments than for houses, especially if you can ditch your car and that monthly insurance and car payment altogether.

Amenities

Some of the costs that come with renting a house don’t apply when you rent an apartment, for example yard maintenance. On top of that, apartment buildings or complexes typically offer some amenities to residents that are included in the rent, such as gyms, swimming pools and other recreational amenities as well as on-site laundry and other services.