Home Price Appreciation Forecast Questions continue to come up about where home prices will head throughout the rest of this year, as well as where they may be going over the few years.
BUY Versus RENT By The Numbers
Should you continue to pay your landlords mortgage payment or buy your own property and begin to build your own wealth? Let's look at a purchase and rental scenario.
The median home in America costs $190,000 and historic annual home appreciation is around 3%, according to data from RealtyTrac. If you purchase a median home today, and put $19,000 (10% down payment) with 30 year fixed mortgage at 4%, you would own a home worth $426,000 in 2045 and pay a total of roughly $373,000 for it. That includes mortgage, taxes and insurance, a difference of $52,000. After 30 years you could live rent free, a nice prospect as you head into retirement.
If that same person rented and we assume they pay $1,312 in rent, which is average fair market rent for a 3 bedroom nationwide, according to RealtyTrac, and his rent increases 2.7% per year (average increase per RealtyTrac), they will end up paying $717,000 in rent over that 30 year period. All without anything to show at the end of the 30 years.
If you are thinking of buying, don't wait, waiting has its costs too! Interest rates and median home prices are likely to rise down the road. At the current rate of appreciation, in 10 years that average home will be likely be selling for $249,000. If interest rates rise to the historical norm of 5.6%, that mortgage payment on that $249,000 home would be $1,574, which is a 52% increase over the $1,037 mortgage payment for the median priced home now.
For a private consultation on buying vs renting or to determine your purchasing power call me, 703-615-2663.
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