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 ratios, income-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.
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.