«

»

Dec 03

HOMES: the PRICE Is the Same, But the COST Is Less

There is more and more research coming out showing that it makes great financial sense to purchase a home today. Purchasing a home right now is a bargain compared to historic norms whether it be rent vs. buy ratiosincome-to-price ratios or income-to-mortgage payment ratios.

In addition to these benchmarks, it is interesting to look at the COST of a home today as compared to pre-peak prices.

According to the most recent S&P Case Shiller price index, residential real estate values have returned to 2003 1Q PRICEs. That, in itself, says a lot about affordability… how many other items in your world cost the same as they did eight years ago?

And, when you factor in mortgage rates, the case for buying a home today becomes even more compelling. In 2003, 30 year mortgage rates stood at 5.88%. Today, they are 4%. How does that impact the actual COST of a home? On a home purchased for $250,000, here is the difference in monthly cost:

That means you save $285.30 a month, $3,423.60 a year and $102,708 over the life of a 30 year mortgage! You buy the home for the same PRICE but the COST is over $100,000 less.

Bottom Line

This is why so many financial advisors are saying that this may be one of the greatest times in history to purchase a home.

Information reprinted with permission from KCM Blog.

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>