Why You Should Buy A House Right Now

The Dramatic Effect Interest Rates Have

Today I was on a thread with a few renters who were having their rent raised even during the pandemic. One of their common reasons for renting was due to the increase in the price of a house. I became curious if buying a home today is cheaper than it was 10 years ago, so I looked up and compared the cost to buy a higher-priced house today with a lower interest rate than it was in 2007- 13 years ago. In Las Vegas, yes, it makes sense to buy a house today. Here’s why you should buy a house now.

We will use “Median Price” as our basis. The median price is the price where there is the same number of homes that sell above this price as sell below that price in a month. This is slightly different than “Average Price” which can be skewed if a $20 million dollar home sold last month, which makes Median Price more relevant.

Housing History In Las Vegas

We saw a peak in home pricing in the Las Vegas Valley in 2006. From June 2006 to June 2007 the median price of homes in Las Vegas dropped 40% from $422,000 to $253,000. Today the median price is $315,000. Price has gone up but what about the payment? That is what matters to most people. What is the home’s monthly cost each month?

The mortgage interest rate in June of 2007 was 6 5/8%. So with a 30-year loan, the principal and interest payment would have been $1620. Taxes and insurance would be additional.

June 2020

Today, even with Las Vegas homebuilding reaching the mountains and offering terrific views, in June 2020, Las Vegas has a median price of $315,000. At the current mortgage interest rate of 3%, the monthly principal and interest payment is $1328. The cost of taxes and insurance is slightly higher than in 2007 so add $100 a month for the increases compared to costs 13 years ago.

The conclusion is that today’s payment for a median-priced home is $192 LESS than a similar home 13 years ago!

This illustrates the dramatic effect interest rates have on your monthly housing expense. It is hard to imagine interest rates getting much lower. They are at historic lows. That is why I think now is the right time to buy a house. These interest rates won’t be here forever, thankfully. For those who are able, you have a historic opportunity. My conclusion mathematically is that if you are going to live in your house for years, now is the time to buy.

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This blog was written by Kurt Grosse with Realty One Group. Kurt has been a top-producing Realtor in Las Vegas for over 24 years and is a retired Nevada building engineer (P.E., C.E.). His goal with every client is to use his knowledge and skills to protect you through every step of your home investment.

Call Kurt today at 702-750-7599 to schedule a housing consultation.

Blog source: Custom Homes Las Vegas