Prices at 2003 Level
If you look at today’s real estate prices you will find that they have fallen to the level of prices in 2003. That is good news for today’s buyers, but not so good for today’s sellers. But that is not what I want to talk about today. Markets, whether it is the stock market or the housing market, always seek equilibrium. We had a quick run-up of prices over several years before the “bubble burst” and prices started falling. I have heard a lot of real estate experts say that prices today are at the level they were in 2003.
What does that mean to you, the home buyer, in today’s market? If you bought a home in 2003 that was worth $200,000 with a 20% down payment, your payment for Principal, Interest, Taxes and Insurance (PITI) would be $1,122.92, assuming you were paying the average of the interest charged in 2003, which was 5.94% for a 30-year loan. If you were to buy that same $200,000 home with 20% down today—the interest rate as of Friday, January 27, 2012 was 3.70%. That would make your payment of PITI $910.78. That would be a savings of $212.14 per month, which calculates to a savings of $76,370 for the life of the loan.
Prices are the lowest they have been in eight years. The interest rate is at historic lows. So what are you waiting for? Contact me or a real estate broker near you and buy that home you have had your eye on.
John Paulson said in September of 2010:
“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.”