Considering Buying A Home? Look at COST not just Price

Keeping Current Matters provides real estate agents with national industry information and statistics that can be valuable in helping to analyze our local market. Their latest blog post offers an interesting perspective on what the cost would be if you waited, even a year, to buy a home. Read more:

We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home. Let us explain.

Last month, the Mortgage Bankers Association(MBA), the National Association of Realtors, Fannie Mae and Freddie Mac all projected that mortgage interest rates will increase by about one full percentage over the next twelve months. We also know that many experts are calling for home prices to also increase over the next year.

What Does This Mean to a Buyer?
Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 even if home prices don’t increase:

Where Real Estate Prices are Headed

The Keeping Current Matters reports from a Pulsenomics survey where real estate prices are headed over the next five years:

"Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number."

The results of their latest survey

The latest survey was released last week. Here are the results:

• Home values will appreciate by 4.3% in 2014.
• The average annual appreciation will be 4.2% over the next 5 years
• The cumulative appreciation will be 28% by 2018.
• Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 16.8% by 2018.

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

Denver 's Proactive Approach Proves Successful

Denver weathered the economic recession better than most in the country according to a study released from the Pew Charitable Trust.  Denver's tax base relies primarily on sales and income taxes and less on property taxes, the area felt the economic pain sooner, but recovered quicker.  Cities that relied on property tax didn't feel the economic strain until more than a year later, but at the end of 2011, two-thirds of those cities have yet to recover.  With other tactics like cutting spending, a hiring freeze and encouraging early retirement, Denver positioned itself for long term growth. Read more at the Denver Post.