If you have been entertaining the idea of a home purchase, you may be interested in this tidbit of information from economist Karl Case.
Economist Karl Case (of the Case-Shiller home price index) provided a useful (if not obvious) perspective on just how affordable houses are these days. In short, Case notes that four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of 6.6 percent was $1,533. Today that $300,000 house would sell (on average) for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833. What’s more, the 20-percent down payment would be knocked down to $42,600 from $60,000.
Now mind you, these figures are based on national averages and real estate is local, so the exact scenario might look different depending on where you live.
So are you are optimist or a pessimist when it comes to the current real estate market? I believe the late actor John Candy would have put it this way – You see, if you’re an optimist you’re probably going to pay about $833 a month if you buy a home now and if you’re a pessimist, you’re probably going to pay more when you do decide to buy a home later on in the future. Time will tell.