Lots of Reasons Real Estate is Booming

Income and price used to be the deciding factors of whether or not someone could afford to
buy a home. Interest rates are now the driving force that is making ownership possible for
many more. For example, in 2000, rates were above 7%. That meant that a $500,000
mortgage would have a monthly payment of $3,326.52 (without taxes and insurance). A
$500,000 mortgage at a 2% interest today is $1,848.10. Add to this the fact that rents
continue to rise. So, in many cases it is less expense to buy than to be a tenant.

Pent-Up Demand In Napa Valley

All the reasons that homeowners need and want to move still exist. Marriage, divorce,
birth, death, job transfer, and tax planning, are still what is nudging most Napans to move.
Add to that the influx of people that have long dreamed of being free from their commute.
The past 10 months have allowed some of them to realize that option. If you have priced
homes in Bay Area cities, you are probably aware that Napa County is less expensive and
more desirable.

Don’t Get Caught Saying “Woulda, Coulda, Shoulda.”

Because there is a shortage of homes to view, and because prices continue to rise, some
home buyers are asking themselves if they should wait. Some feel that if they wait a year
the prices will go down and there will be more homes for sale. Buying a home is a big
decision. Your family dynamics will dictate the right time to purchase a home.

What Is The Cost Of Waiting?

Here are some things to consider when you are planning.
1) If a $600,000 house appreciates only 5% in a year, that is a $30,000 increase in
value. And homes have reached as much as a 14% increase in the past 12 months.
2) The principal and interest payment on $570,000 at 2% is $2106. It is $2403 at 3%.
That is $17,820 increase in the monthly payment cost over just the first 5 years.
3) If you are renting at $2,000 a month, that is $24,000 a year that is being paid for the
landlord’s ownership cost.
A property would have to decrease quite a bit to outweigh the amount saved in mortgage
and rental payments.

True Cost Of Ownership

It is easier today than any other time in history to check on the price of anything from a
refrigerator to a car. I personally want to know what any of these is actually going to cost
me over the life of the payments. So here is how I approach purchasing anything with a
payment plan. I calculate the difference between the “discount” price versus the “no
interest” cost to me over time. And so far, I have found that my cost is less with the low or
no interest rate versus a rebate or discount.
If my 40 years of selling homes in this beautiful valley can save you time and money, please
pass this tip to your friends.

If you have a question do not hesitate to ask me.
Judy Naimo
Coldwell Banker Brokers of the Valley
License #00827675