Buying a home can be a big decision.
Talk to your trusted financial planner or a trusted real estate advisor to get the pros and cons of buying a home now vs waiting.
Hi, folks. I’ve had a few people tell me lately that they’re going to wait to purchase a home
until they become more affordable. Now, stick around a few minutes and see why waiting is probably not a good idea.
Hello, everyone. Steve Huhta here from Century 21 Union and Houses in South Bay dot com.
And one of those people even quoted me from another video saying that I predict appreciation
to slow down in the coming year. And yes, appreciation is forecast to slow over the next year. But it’s still going up. Let me give you an example. Now, over the last year, prices have appreciated at around 28% in the Los Angeles area. But it is forecasted to slow down to about 18.5% this coming year. So, at that 18.5% appreciation, if the median home price is $750,000 in a year, that price will be $888,750
Now, for simplicity’s sake, we’re going to show financing on the full amount. But remember, the prices go up, so will the necessary down payment and your property taxes. So if we take that average mortgage interest rate of today of 2.9% and keep that the same throughout the next year, we will go from a payment of $3,121 PITI at $750,000 to a payment of $3,699 for the $888,750 price an increase of $578 a month or $6,936 a year.
But wait, that’s if interest rates stay the same as today. Economist and major lending companies all agree that interest rates are forecast to go up over the next year. So if we look at again at today’s numbers, we find that a loan for $750,000 at 2.9% with a payment of $3,121 and we project that forward a year at the forecast interest rate which should be about 3.57%, we find that along with the increase in price to $888,750 and the increase in interest, our new monthly payments will be $4,025 a month. An increase of $904 a month or $10,848 a year.
Now, I don’t know about you, but I could think of better things to do with ten thousand dollars every year, then pay more for the same house, I could buy today for less.
Now, the numbers and other factors are all going to be different for everyone. So talk to your financial adviser or trusted real estate advisor and find out what buying now versus waiting could mean for you.
Now feel free to contact me with any questions.
Bye for now.