The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Drygulch Dan who wrote (77867)	5/19/2007 6:50:23 PM
From: Think4Yourself	Read Replies (3) of 306849

Just for grins grabbed a loan calculator and scheduled $700K loan for 30 years at 5.875% for a $800K house. It figured in taxes, PMI, and hazard insurance, and came up with $5658 monthly payment. Then I was curious what would happen if the buyer moved after 5 years? Let's ignore the sales commission and maintenance. The borrower paid 5658*60=$339,480. They accumulated equity of $49,634. That means they paid interest, taxes, insurance, and PMI of $339,480-49,634= $289,846 to live there for 5 years. Divide that by 60 months to determine they paid $4831/month in the basic equivalent of rent. They also get back their $100K (dead money for 5 years) deposit plus or minus the change in home value, and less the sales commission when they sell. Have no idea what rents are in California these days. Can you rent a nice place for $4831/month in California right now? If you can that might explain why sales are dropping off.

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