When you think about home buying power now in contrast with that in 2008, the differences are pretty astonishing. Not only have home prices come down substantially, but the record-low interest rates make buying real estate very affordable for those that can qualify for mortgage loans.
Home prices in Utah didn’t really start dropping until 2008 when the market really started slipping in the summer of 2007.
If you wereprocuring for Salt Lake City Real Estate in July of 2008, the median list price of those homes was $309,000. A common rate for 30 year fixed mortgages of primary residences during that time was around 6.65%. For a buyer purchasing the median home with a $44,000 down payment, this would leave them with a principal and interest payment of $1,701. That time was surely a good time to buy
Examine that with market conditions now:
The latest median list price of Salt Lake City Utah Homes for Sale is $214,000. 4.25% for 30 year fixed mortgage loans. A buyer would have paid just $836 a month if a s/he placed the same $44,000 down payment on the median house, at the going interest rate under these conditions.
That is not even half as much as the monthly payment during the 2008 scenario.
If a home buyer pay his mortgage off at terms over 30 years, then he would paid a total of $347,434.49 in interest. In the second scenario, they would have paid just $131,067.21. And that means savings of more than $216,000 in interest over the life of the loan.
Because interest rates are so low now, and because home prices are lower, the buyer might actually want to consider a 15 year fixed mortgage. With a 15 year fixed mortgage at the current median price, and the same $44,000 down payment, the buyer would have a monthly payment of$1,215.30. Still cheaper than the 30 year fixed payment of 2008, but paid off twice as fast. With a 15 year fixed mortgage today, the buyer would save nearly $300,000 in interest compared with if they would have bought in 2008.
Now this scenario has flaws, and people rarely actually bought homes priced at the median price, but compared with two years ago, Salt Lake homes are very affordable.
