I was reviewing some historical averages in order to put some perspective on where we stand in today’s real estate market and wanted to share with you some interesting points:
Historical Trends Imply Prices are Undervalued
Going back to 1989, when the average home price nationally was $95,000 and adjusting from there at the historical rate of 4% appreciation annually, the average home price now would be $231,000 – However, the national average is currently $176,600 – This implies, based on that historical trend line, prices may still be undervalued by 23.8% right now.
Interest Rates are Incredibly Low
Interest rates remain at historically low levels. In fact, in 2012, interest rates hit new record lows, supported by Federal Reserve monetary policy.
Low Prices + Low Rates = Affordability
The combination of today’s low prices and low rates has led to unprecedented affordability: In fact right now it takes a smaller slice (12.9% vs 21.6% historically) of the typical family’s income to pay the the mortgage on a medium-priced home, than it has anytime in the last 43 years…truly amazing.
Affordability in Perspective
For example: In 1989 the median home price was $94,000 and mortgage rate was 10%, leading to a payment of $825/month (P&I) Whereas in 2012 the median price was $176,600 and mortage rate was 3.4%, leading to a payment of $626/month (P&I) wow…
So, Is it a Good Time to Buy?
In my mind, this perspective emphatically answers the question, “Is it a good time to buy?” It might be worth taking a hard look at owning a real estate investment that you and your family can use and enjoy in Big Bear, Southern California’s premier resort. It is possible, should you decide to offer your home as a vacation rental, to generate income from your Big Bear home as well. Let us know if you would like more info on any of these topics or if you have questions on any homes that you see for sale here in Big Bear. We have access to ALL the Big Bear homes for sale.
Our knowledge of this unique market has consistently saved our clients time and money in their search and purchase of Big Bear real estate, and we look forward to doing the same for you.