On this property I'll have to put $50,000 down to secure it and the options. If in one year the $780,000 used homes drop to $600,000, then I'd walk away from the $50,000 deposit and purchase a $600,000 home and dump in $175,000 in upgrades and break even. I really really really doubt that is going to happen. I've seen people taking off $25,000 to $50,000 in the neighborhood but then the houses were going for $800,000 (20 year old with old people stink).
Can salaries expand at the same rate? The mean salary in the town I'm looking (South Barrington, IL) is $262,000 from the 2000 census. If we are looking at $825,000 purchase price for the home, roughly 3x the yearly gross of the mean, I don't think that salaries are REALLY coming into play, at least for that area currently. I don't know though, do people that are making $260,000 really feel a salary pinch?
Also, I'd end up putting down 50% and living there for 18 years and trying to pay off the balance of the house within 2-3 years.
Will interest rates remain low? No. Does it really matter in that neighborhood? I don't know. That's what's eating me up. I wouldn't think I would sell unless my business went belly up, then I'd move the extra 30 minutes out because I would have no job, and no commute. |
