Renters, I don't know if I can help you

By
Industry Observer

A while ago, I wrote about how you may miss your opportunity to buy a home at a great price.  Well, if you didn't buy then, you may have missed that opportunity. 

Although still reasonable compared to historical prices, home prices have crept up in 2013.  The number of homes available at a given price is somewhat restrictive, and the median sales price in this area has increased more than ten percent in the last year.  So, you can expect to spend around ten percent more this year than last for a similar home.  Well, sort of...

The purchase price of the same home today may be about ten percent higher than a year ago, but your mortgage payment will add around thirteen percent to the amount you finance.  In real numbers, that means that, if you bought that $200 thousand home you were considering a year ago and financed ninety percent of its price at the approximate average rate of 3.5%, your principal and interest payments would have been around $808.  Today, that same home sells for at least $220 thousand, and financing 90% of it at the current average rate of 4.5% (or more) would cost you about $1,004 a month. 

So your penalty for not acting a year ago is having to come up with a higher down payment, and pay a couple hundred dollars a month for the next thirty years.  That is, if you can qualify for the additional amount.  If you have been qualified for a maximum of $808 (the area you shopped a year ago), you are now looking for a home priced around $159 thousand.  That would be a home priced around $146 thousand a year ago. 

With the assistance of a reputable home finance adviser, you can decide if it's still possible to fire your landlord.  While nobody can accurately predict the future, I know of no logical reason to believe that the current trend will reverse.  If you are still in a financial position that allows you to buy, congratulations.  If you want to put together an action plan, or just discuss possible strategies, call me.

Posted by

 Mike Carlier  Lakeville, MN

 

612-916-3033

 

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Topic:
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Minnesota Dakota County Lakeville
Groups:
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Tags:
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Rainmaker
2,545,684
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Yes to calling this agent and discussing the potentials here

Dec 23, 2013 11:50 PM #1
Ambassador
3,155,503
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Of course, kicking themselves and waiting for the same circumstances to repeat is ludacris for renters in your market that want to own a home.  They need to call you and get themselves the gift that keeps giving, a place to call their own.

Merry Christmas!

Dec 24, 2013 03:44 AM #2
Ambassador
2,456,591
Fred Griffin Tallahassee Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

He who hesitates is lost.  Coulda shoulda woulda.  Act now and avoid further regrets!

Dec 24, 2013 07:36 AM #3
Rainmaker
3,985,513
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

It is hard to hhelp people who are not willing to help themselves

Dec 24, 2013 11:02 AM #4
Rainmaker
522,322
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Chris Ann, Fred, Bill, thanks for your comments.  We're obviously on the same page with this one.  For those who we warned a year ago, buying a new home will require a significantly greater sacrifice today, but possibly not as great as in the months and years ahead.  It's probably still worth the commitment.  Merry Christmas to all!

 

Dec 24, 2013 11:19 PM #5
Ambassador
1,770,405
Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

Mike you gave given us some really detailed information that truly makes sense. I think there are many renters out there that really are wasting their money and don't even know their true potential.

Dec 26, 2013 11:21 PM #6
Rainmaker
522,322
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Noah, the best and most useless advice I could give a renter today is to call me in 2012.  Second best but much more useful, call me now.

Dec 27, 2013 12:44 AM #7
Ambassador
1,221,086
Ralph Gorgoglione
Maui Life Homes / Metro Life Homes - Kihei, HI
Hawaii and California Real Estate (310) 497-9407

Mike, renters often have a “penny wise, dollar foolish” attitude.  They can’t or won’t invest in buying a home, but they throw away hundreds of dollars in renting, never seeing any equity to show for it.

Jan 27, 2014 06:47 AM #8
Rainmaker
522,322
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Ralph, I think a lot of renters' inaction is due to a lack of self-confidence over their inability to predict the future.  The economic impact of that lack can be tremendous. We all over-hesitate on occasion.  I happen to like Sam Adams beer, and began watching their stock a few years ago when it was around $25 a share.  I waited for a price drop, and waited, and waited.  It's trading around $215 today, and I'm still waiting.  Foolish me.  Of course, not owning that particular stock is not the same as not upgrading my lifestyle with a better place to live and own.

Jan 27, 2014 11:12 PM #9
Rainmaker
861,325
Gabrielle Kamahele Rhind
KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ
Broker/Owner

GOOD MORNING MIKE ... I agree with your comment, many do not have the self confidence.  Also, many just like renting -they don't like the commitment it would take to own a home - so what is a waste of money for some - is not for others.

Feb 02, 2014 07:42 PM #10
Rainmaker
522,322
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Hi Gabrielle, sometimes the lack of self-confidence is warranted and sometimes not.  People often don't feel adequately secure in their job or family status to feel comfortable making any commitment that is not temporary.  In the "old days" they could be encouraged by the notion that the home they buy would be worth enough to get out of the financial commitment cleanly in a couple years.  Today it seems a bit less certain to most consumers.  However, no matter how justifiable, hesitation also has a quantifiable risk that needs serious consideration.

Feb 02, 2014 11:00 PM #11
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Rainmaker
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Mike Carlier

More opinions than you want to hear about.
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