Cost versus value

Judy Boyle, Realtor®, RE/MAX

We all know that owning a home is an important component in ensuring financial freedom. But how do we know for sure that we are making the most educated decisions to ensure the maximum return on our investment?

As your local real estate expert (and a real estate junkie myself), I spend countless hours reading up on the local trends, analyzing the data presented by the big guys (Fannie Mae, Freddie Mac, Mortgage Bankers Association, National Association of Realtors, and Core Logic to name a few), and (almost more importantly) looking at the predictions. Four times a year I consolidate my findings and create my Home Buyer and Seller Guides which are complimentary to you for the asking.

In this article, I would like to provide a sampling of my findings for the Summer of 2015.

When I think of home affordability, I think of “Cost vs. Value”. What this means is the price of a home is not the only factor when computing your monthly payments. We all want to know we are getting the most bang for our buck. The best way to do this is to know where home prices and mortgage rates are today and where they are headed. This is where I rely on my trusted advisors cited above.

The Home Price Expectation Survey, a nationwide panel of over 100 economists, real estate experts and investment and market strategists, predicts that home prices nationally will actually fall 3.7 percent by the end of 2016 and continue on a down trend through 2018. In contrast, mortgage rates are expected to climb a full percentage point to 5 percent by the third quarter of 2016. Okay, so what does this all mean?

Based on the above predictions, if you were to buy a house today for $400,000 your payment would be $1,909 (principal and interest with a 3.5 percent down payment). That same house next July will “cost” $385,200 yet your mortgage payment will increase to $1,995.

To bring this information more local, according to the RE/MAX New England Housing Report, home prices in Massachusetts have continued to increase by an average of 3 percent month over month for the past year. If this trend continues, that same $400,000 house could very well “cost” you a whopping $2,331.00…an increase of $422 per month!

So if you are still asking yourself if it’s a good time to buy or sell, don’t just listen to me. Take the advice of Doug Duncan, senior vice president and chief economist for Fannie Mae, who says it best: “The rule for when it is a good time to refinance or buy is always the same: given your household budget and where current interest rates are, if it makes good sense to refinance or take out a home loan today, then today is the day to do it.”

Boyle lives in Northborough with her husband and two children where she is a chapter leader of the Neighbor Brigade, a local nonprofit that assists families in times of crisis. She has been a real estate agent since 2003 and consistently wins awards and accolades for excellence in customer service and sales volume.

Her mission is to empower her clients to make smarter decisions through data-driven insights and local market knowledge. She invites you to follow her on Facebook at www.facebook.com/judyboylecares, call or email her for the Summer 2015 Home Buyer and/or Seller Guides, or just to talk real estate.