Why You Should Buy A House Today
The reason why you should buy a house right now is the historically low interest rates. Today I was on a thread with a few renters who were having their rent raised even during the pandemic even though they were paying their rent. One of their common reasons to continue renting was due to the increase in home prices. I became curious about if you should buy a house today or not. Will you have a lower payment than you would have had 10 years ago?
I looked up the median price of a Las Vegas home in 2007, which was just as the recession had started, and home prices had dropped 40%. Then I took the median price of a Las Vegas home today and calculated the principal and interest payments for both. My conclusion? In Las Vegas, yes, it makes sense to buy a house right now. Here’s the math for why you should buy a house right now.
Median Price- 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 price will typically be slightly different from “Average Price,” which can be skewed if a 20 million dollar home sold last month, making the Median Price more relevant.
House Payment vs Interest Rate 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 in Las Vegas is $335,000. The Median 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 makes a difference. The mortgage interest rate in June of 2007 was 6 5/8%. For a $253,000 loan with a 30-year note, the principal and interest payment would have been $1620. Taxes and insurance would be additional.
Buying a House In January 2021
Today, even with Las Vegas homebuilding reaching the mountains and offering terrific views, in January 2021, Las Vegas had a median price of $337,250. At the current mortgage interest rate of 2 7/8%, the monthly principal and interest payment is $1399.62. 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 $120 LESS than a similar home 13 years ago!
This illustrates the dramatic effect interest rates have on your monthly housing expense. With these historic low rates, it’s hard to imagine interest rates getting much lower. That is why I think that you should buy a house right now – at least in Nevada.
Today’s Interest Rates
These interest rates won’t be here forever, so you have a historic opportunity if you are able to buy a house right now. Of course, everything depends on credit and having a 3% down payment minimum. My conclusion mathematically is that if you will live in your house for years, now is the time to buy.
Check with me for the latest news about Nevada down-payment assistance programs and financing options. Home Is Possible Nevada is a great assistance program and so is Home Again Nevada. Search from hundreds of pre-set parameters for homes on our website or do an advanced search to find exactly what you are looking for. If you have any questions or would like to know your home’s value, contact us below.
This blog was written by Kurt Grosse with Realty One Group. Kurt has been a unique top-producing Realtor in Las Vegas for 25 years. Kurt was a retired Nevada building engineer (P.E., C.E.) who uses his knowledge and skills to protect you through every step of buying your home investment. Call Kurt today at 702-750-7599 to schedule a housing consultation.