Tuesday, May 13, 2008
Lake Hills cracks through the $400k barrier
Lake hills in western Riverside has already seen some amazing price declines, especially in the high end stuff. The mid-priced homes have actually been kinda sticky lately with most of them lurking in the high 400s and low 500s. That has changed this week with the listing of 16447 Village Mdws.
16477 Village mwds is a 3 bed 3 bath home, 3455 sqft in size and it sits on a nice big .4 acre lot (much of it is a hill though). This home sold new in Feb of last year for $685k. It has already gone back to the lender so the purchaser obviously did not make very many payments (if any). The house just listed today for $389k. That is a loss of nearly $300k (43%) in a little over a year.
I imagine that this will get a flurry of offers since it is the first sub-$400k listing (there is another one but it's a short sale so I don't count it). Even at that price this is probably still at least $100k too high if you go by comparable rental values though. The taxes are also very high as are the HOA fees. Regardless someone, probably multiple someones will hop off the fence and fire offers off at this one. I bet it does not last 2 weeks.
What does it take to buy this home using traditional amounts. Lets say it sells over asking for $400k. With 20% down that means you have a loan of $320K. Assuming you have stellar credit and can get a loan at 6.5% your payments will be 2022/mo, add in tax pf $600/mo and HOA of $190/mo and another $150/mo for insurance you get a monthly payment of nearly $3000.
If you go by the old standard of 28% rule that would mean you will need to make over $86k per year to afford this home and that is with 20% down. If you only have 10% down then you need to make $98k per year to hit the 28%. And that is 28% using just the mortgage (no tax, HOA or insurance factored in).