By Steve Harney
Inman News’ 2011 100 Most Influential Leaders in Real Estate
Author Keeping Current Matters
More and more research is coming out showing that it makes great financial sense to purchase a home today. Whether it is rent-vs.-buy ratios, income-to-price ratios or income-to- mortgage payment ratios, purchasing a home right now is a bargain compared to historic norms.
If we look at the COST of a home today compared to pre-peak prices, we can truly understand the tremendous savings available in today’s real estate market. According to the S&P Case Shiller price index, residential real estate values have returned to 2003 prices nationally. That, in itself, says something. However, 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 5.83%. Today, they are under 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:
You save $278.12 a month, $3,337.44 a year and $100,123.20 over the life of a 30 year mortgage! You buy the home for the same PRICE but the COST has been reduced by more than $100,000.
This is why so many financial advisors are saying that this may be one of the greatest times in history to purchase a home.