Friday, October 11, 2019

Rates Tumble Again

Interest rates continue to be quite favorable and buyers thinking about SW Washington would be wise to invest in local real estate. I wrote last week about Oregon's HB 2001 which bans the Single Family Zoning in all cities in Oregon with more than 10,000 residents.

With rates in the basement and a strong chance for a rush to SW Washington as Oregonians flee the destruction of suburbia, real estate is as good a prospect as it has ever been. Oregon Governor Kate Brown signed several pieces of real estate related bills including HB 2001 over the summer.

Clark County already has a slight real estate price advantage over Washington County and Multnomah County in Oregon. But a rush of new comers across the mighty Columbia could put enough price pressure on our market to move us ahead of our southern neighbors. Buying now before the reality sets in over there could prove rather fortuitous.

Even if we don't see a mad dash north, these low rates are a perfect opportunity to get into the housing market or make the move up to your dream house. Many people fail to realize the significance of these super low rates. Lets say a homeowner bought a 1500 SF 3 bed, 2 bath house in 2014 for $250,000. Lets say it's worth $350,000 today. If the homeowner borrowed 237,500 at 5.5% they have a payment of roughly $1790. They owe about $218k and sell at $350k. Minus closing expenses lets say they walk with a 100k. Now they buy a $500,000 house, much nicer and put down 20% which they just pulled out of the house they sold BTW. The new house won't have mortgage insurance but it will have higher taxes and a bit higher payment coming in at $2300.

But what about the people that bought in 2011? They probably got the same 1500 foot house for $200,000. Their payment is $1300 a month. They owe 155k and sell for the same 350k. After expenses they walk with a very tidy $165k. That shiny new half million dollar home will cost them $1900 which is pretty close to what their current house would rent for.   

Real estate is amazing and one of the best ways to grow wealth for average citizens.

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