In today's market people are looking for the "good deal". I have to say everything is a good deal today. Let's think about that for a moment. 1. Have prices rolled back 10, 20 30 or maybe even 40%? 2. Are interest rates at a historical low? 3. What about property tax?
Let's take a closer look at each question:
•1. Have prices rolled back 10, 20 30 or maybe even 40%? I think it is safe to say that just about every property has rolled back on the price in the Bay Area, California and probably throughout the US. If I were to say: " you can buy this house for 500K when it was listed for 700K" would you buy it? That is somewhat what we have today. Prices have rolled back to somewhere depending on the neighborhood to prices of 2004, 2005, 2006 prices. Mortgage example 500K loan approximately $2700 per month for a 5% 30 year note. A 700K loan $3700 per month for a 5% 30 year note. $1000 savings per month
•2. Are interest rates at a historical low? Today as a write to blog, rates are around 5% for a 30 year fixed loan. As this year closes out we will see the average rates for the calendar year 2009. Using the sample above a 500K loan at 5% cost you around $2700/month. A 6% loan would be around $3000/month. $300 savings per month
•3. What about property tax? This is a great one to think about for budget planning. For budget purposes I always use 1.25%. This does vary from city to city but if you take your property tax and add the city, county and state "extra fee's " , its a good number to use for planning. Going back to the example of buying the home at 500K instead of 700k, the property tax bill would be $6,250 vs. $8750 per year respectively. That's $2500 saving annually. $200 savings per month.
Just these three issues bring back the question, Are you looking for a good deal?
Pricing has stabilized in the Bay Area throughout the summer months and in some areas has actually gone up from prices earlier in the year. With prices favorable, interest rates low, and tax base cost lower than passed years, it a great time to think about buying. If you would like to comment on this article or would like to set up a appointment to review your strategy and plans for purchasing a new home please contact me www.interorealestate.com/agents/jameslight
Looking forward to hearing from you.
Have a great day!
Jim Light
