Blogger Talks Real Estate Buying Power on the North Fork

Back in 2009 I was at a presentation about the new “buying power” of a buyer on the North Fork. The discussion was about both the decline of home prices (both nationally and on the North Fork), coupled with the low mortgage rates (or so we thought at the time!) across the country. The point of the presentation was when you combined the two factors, a buyer on the North Fork was able to buy a home much more affordably in 2009 than during 2007. Why did they use 2007 for the comparison? It was essentially the year before the “bubble” popped.

Fast forward to 2012, and a recent article in Realtor Magazine reported that today’s buyer has the same buying power as a buyer did back in 1971!! 1971??….  Could this actually be possible??? 

Being analytical (with an A-type personality to boot), I had to do the math to understand what this actually translated to in terms of real numbers here on the North Fork. Unfortunately, Long Island’s MLS records do not go back to 1971, however I can give you a glimpse of where your buying power is today, as it compares to where it was back in 2007. All I can say is PREPARE YOURSELF FOR SOME SERIOUS WOW-FACTOR!

For this comparison, I used two very similar ranch style homes, both located in Mattituck and both having three bedrooms and two bathrooms. Unfortunately (and fortunately), we can’t compare two “cookie-cutter-like” homes (we just don’t have that out here), however the two houses presented in this comparison are similar in condition, lot size, style, etc.  

One ranch sold in July of 2007 and the other ranch sold in December of 2011. The ranch that sold in 2007 was located on Theresa Drive; sold for $480,000 when the national mortgage rates averaged 6.69 percent. The house that sold in late 2011 (last month) was located on Kraus Road; sold for $375,000 when the national mortgage rates averaged 3.94 percent. Refresher: both houses were 3 bedroom/2 bathroom homes and were as similar as we could find for this comparison. Now…. PREPARE – FOR – YOUR – WOWING!!

Assuming 20 percent down on both houses, your mortgage payment for the house purchased in 2007 would be $2475.32, HOWEVER, your mortgage payment for the (almost) same 3 bdrm/2ba ranch, if purchased last month, would be $1421.89.  Seriously.

Are you WOWED yet??  Let’s take it just one step further……

• Last month, the (almost) same house would have cost you $1053.43 LESS EACH MONTH, than (essentially) the same house did back in 2007.
• The popping of the bubble saves the 2011 buyer $105,000 (21.875 percent) for the “same” house – purchase price alone.
• Couple that with the record low mortgage rates in 2011 and now your cost of ownership is down a total of 43 percent from 2007.
• Your annual savings are $12,641.16 EACH YEAR ... for 30 years.
• Your total cost of ownership (mortgage-wise) is $379,234 LESS than it was in 2007.  es, that is over one-third of a million dollars less.

Now are you WOWED?

— Nicci Fitzgerald