Prices are over rated!
Prices get all the attention, quoted on the nightly news and in articles wherever you turn. Price is an important number to a seller but really only at the time they sell. Much more important and chronically overlooked is the cost of ownership…
An analysis of your personal economy
Regardless of glazing over when an economist preaches about the price elasticity of demand graphed in three dimensions, we all do it. You have a clear understanding that your personal economy is bringing money in through your labor and talents and then using that money to buy what you want and need. Simple, straightforward and no calculus required. However there are two concepts from the wider economy that affect
homeownership considerably for most of us, the Cost of Capitol and the effects of Taxation…
What is this going to cost me?
In terms of real estate ownership the Cost of Capitol is the interest rate on your loan. Swings in rates have a major impact on your cost of ownership.
Here are two examples of taking advantage of today’s very favorable cost of capitol.
Compare buying a home today at the same price as in 2002. (Which is roughly were price levels have fallen).
*30 year fixed rates
Now compare being a move up buyer in this market versus four years from now with only moderately higher interest rates, 6%, as well as $50,000 in appreciation over the next four years, only 1.6% annually.
*30 year fixed rates
Just the tax, please!
Taxation can have the effect of reducing your costs even more. Comparing home ownership to renting is the best way to illustrate this affect that taxation has on your overall costs. As a rough rule of thumb your combined state and federal taxes are reduced by around 20%-30% of the monthly loan payment (depending on your tax bracket).
the market today 