You may feel like we are living in uncertain times and question if now is a good time to purchase a home. Just remember, we've been through ups and downs before so historically, this isn't anything new. Some of you may remember when you, or your parents, experienced 18% interest rates or in 2007-2008 when we had the Housing Crisis where lending was extended when it shouldn't have been. Guess what? We've still purchased homes and, have prospered!
Let's take a minute and do a little comparison of principal and interest payments for a purchase in 2007 verses 2022. In 2007, the average price of a Celebrity Home was $267,400 and interest rates were 6.34% on a conventional loan, with 5% down and a 30 year term. The principal and interest payment would have been $1,579.01. Now, in 2022, (15 years later), the average home price is $320,000. Currently, interest rates are slightly over 5% so we'll use 5.308% for our calculations. Again, a conventional loan and 5% down for a term of 30 years. The principal and interest comes to $1,689.62. So, to own a NEW HOME valued at $320,000 compared to a 2007 value of $267,400, it is only $120.63 more per month, or $4.00 per day higher than it was back then.
I can already hear you, "But Karen, you said prosper! Where have we prospered?" Well, let me tell you! If you purchased the home in the 2007 example above, that home is now worth $432,030. That is a GAIN of $164,630! The historical appreciation rate for our geographical area has been 3.25% per year! If you purchase a $300,000 home this year, in 15 years, that home could value at $484,700. A $400,000 home could value at $646,070. Because of this, TODAY is always the best time to purchase a home. Each day you wait, you are foregoing year over year appreciation. That is about $11,000 per year that you don't have to work for. Congratulations!
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