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Why the Boston condo market is ideal for homebuyers

 

This morning I was reviewing the LINK Boston’s 2011 annual report (download here). When looking at the 10 year city wide price index (appreciation rate) something caught my eye:

  • 2006 Q4 price index: 136.

  • 2011 Q4 price index: 136.

That got me thinking….no one was scared to buy a condo in 2006, why are people scared now?

City wide housing statistics in Boston show steady increase in average selling price and appreciation rate since a low in Q1 of 2009. This should help offset some worries about the market, but what I find most compelling is the difference between mortgage payments in 2006 vs. mortgage payments today. What if I told you the average monthly mortgage payment on a $500,000 home in Boston is about $700.00 less than it was 5 years ago?

Well, it is. All you have to do is look at the difference in interest rates. Below are the rates on a 30 year fixed terms according to bizrate.com:

  • 2006: ~6.75%

  • 2012: ~ 4.0%

Let’s compare a $500,000 purchase in 2006 to now:

 

Monthly Payment

Down payment:

10%

20%

2006 @ 6.75%:

$2,918.69

$2,594.39

2012 @ 4.0%:

$2,148.37

$ 1,909.66

Savings:

$770.32

$684.73

 

Over a 30 year term thats a savings of more that $250,000.00! Savings like that should ease any doubts you have about the real estate market in Boston.

A lot of national press is painting a grim picture of the real estate market. Fact is it’s just not true in Boston. If low interests rates aren’t compelling enough, historically high rent rates and low vacancy has made Boston one of the most expensive cities to rent in. According to a report released in December 2011 by the National Association of Realtors, the average rent in Boston is 5% higher than the Landlord’s mortgage. Look for my blog on high rental rates later this week.

If you are considering a puchase in or around Boston, contact Doug Miller (617-276-4460, doug@ascendrealtygroup.com) at Ascend Realty Group today!

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