Is It Cheaper To Buy Or Rent?
Any rate under 6 percent qualifies as historically low
There have been a number of reports in the press recently discussing whether it is cheaper to buy or to rent. Some say that in our area, we are getting close to the point where it may be cheaper to buy than to rent. Because real estate investments are long term, I want to give you some thoughts on this matter.
We have all heard that interest rates are going to go up. We have been expecting this to happen for a long time and it hasn't yet. Rates have stayed historically low—in fact, any rate under 6 percent qualifies as historically low. So let's just take a house that costs $550,000. Let's say the buyer has a 10 percent downpayment. The loan amount is now $500,000. The payment for a $500,000 loan at 5 percent for a 30 year fixed rate mortgage is $2,684.11 without any mortgage insurance, taxes, hazard insurance, or condo/hoa fees. When the interest rate goes up to 6 percent, that payment—the principal and interest only‚ rises by $313 to $2,997.75. That can be enough to price a buyer out of the market or out of that particular price range.
It seems reasonable to believe that at some point interest rates will rise. When that will occur is not something I would venture to predict. When it does though, it will make a difference. What a buyer can afford to buy will be reduced. So, if you are thinking about the long term, this is an excellent time to invest in real estate!
For our update on sales, we are going to look at solds since April 1st in New Alexandria, Olde Belhaven Towne, other parts of the Huntington-Belle Haven Patch area .
Here are the home sale transactions that have closed since April 1, 2011:
|List Price||Sold Price||Days on Market|
|6423 15th St||
Below is a list of the homes which are either active or under contract as of April 1:
|Days on Market||List Price|
|6413 13th St||Active||4||3||156||$595,000|
|6614 Quander Rd||Active||7||5||122||$674,990|
|6504 Blue Wing Dr||Active||6||5 + 1||125||$1,495,000|
|6417 Bluebill Ln||Active||5||2 + 1||71||$499,950|
|6310 Olde Towne Ct||Active||4||3 + 1||64||$625,000|
|1529 Belle Haven Rd||Active||4||3 + 1||34||$645,000|
|6324 Barrister Pl||Active||3||3||
|6416 16th St||Cntg NO KO||3||2 + 1||
|2215 Harvard Dr||Cntg NO KO||3||2||
|6630 Cornell||Cntg NO KO||3||2||
|1527 Belle Haven Rd||Contract||4||3 + 1||
Catherine Hare Foltz is a Realtor with Long and Foster's Old Town Historic District Office at 400 King Street in Alexandria. She can be reached by e-mail or at 703-626-6914.