Today is part 3 in the ongoing series on Ownership Cost: Ownership cost: income, payments and house prices Ownership cost: interest rates and down payment requirements Ownership cost: property taxes, insurance, Mello Roos, and HOAs Ownership cost: taxes and opportunity costs Four Major Variables that Determine Market Price Over the last two days we looked at the four main variables that determine home price: borrower income, allowable debt-to-income ratios, interest rates, and down payment requirements. Today we are looking at some of the minor cost inputs that work by influencing the major ones; property taxes and Mello Roos taxes, HOAs, and insurance. PITI lenders have an acronym called PITI, which stands for principal, interest, taxes, and insurance.To that we can…[READ MORE]

Many housing analysts suggest the lack of inventory is because potential sellers are concerned they can't find another home to buy. This is a red herring. The real reason is the lack of move-up equity. Repost from OC Housing News 2011-2016 Back in 2012, I postulated that homeowners would list their homes as soon as prices reached near-peak levels when they could get out without completing a short sale. After watching prices inflate to peak levels and the listings failed to materialize, I concluded that the lack of equity to complete a move-up is what kept supply from coming to market. Loan modifications kept homes off the market to facilitate the recovery. As these loan modifications expired, some of these…[READ MORE]

Today is part 4 in the ongoing series on Ownership Cost: Ownership cost: income, payments and house prices Ownership cost: interest rates and down payment requirements Ownership cost: property taxes, insurance, Mello Roos, and HOAs Ownership cost: taxes and opportunity costs Four Major Variables that Determine Market Price Over the last four days we looked at the four main variables that determine home price: borrower income, allowable debt-to-income ratios, interest rates, and down payment requirements. Today we are looking at tax implications and opportunity costs because these number will give you a more accurate measure of the impact home ownership will have on the owner’s financial life. Opportunity Cost When a buyer puts money into real estate and takes ownership,…[READ MORE]

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