Renting vs. Owning: Purchasing power and mortgage rates in the Albuquerque market

Renting vs. Owning: Purchasing power and mortgage rates in the Albuquerque market

(Transcript Snippet): “Tracy:

Tego, what’s the latest on purchasing power and mortgage rates.

Tego:

Mortgage rates are still really low.

Tego:

You know, we’re still hovering in that all-time low range somewhere in that 3% range for a 30 year fixed mortgage. And I want to just caveat that because it depends on if it’s a conventional, a FHA loan, how much down payment, what your credit is, you know, there’s a lot that goes into that, but, but you know, it’s a net 3% range. And just to put this in some sort of pers perspective, right? If you’re, if, if you’re buying a house today and that home is $300,000, okay. And you’re getting at 3% mortgage, and the estimate is that you’re going to be paying about $1,265 a month for that mortgage. And that’s, you know, just calculating with a down payment and stuff. Are you going to be 1265 a month?

Tracy:

Can you believe 300,000? You can have a payment, right? Yeah. Right. Okay. But if the interest rates go up to like three and three quarters or four, what would that say? Well, this is to

Tego:

Put this in perspective. If you were to buy that, if, if you were trying to keep that same payment of 1265, now you’re going to be closer to a $270,000 house to get the same payment at a 4% mortgage rate. So that, that, that interest rate has huge influence on how much you can buy or how much you can not buy. You know, if, if you’re looking at it from a monthly payment standpoint. Right. And so that’s why, you know, today, again, in this 3% world that we’re living in, you know, we were talking about this last year, Tracy, where we’re saying, okay, well, even if home prices go down, if you’re locking in at 3%, you’re still ahead. Even if prices go down in a year in interest rate, go up and yeah, it’s this whole thing. So and then we had the conversation that came up at our team meetings. It’s like, well, they want to wait

Tracy:

Because I always want to wait and see what happens in the next six months with interest rates and house prices. And I’m like, okay.

Tego:

And that’s fine. That’s fine. Yeah. No, I mean, it, you know, I think sometimes people think we’re just sitting here and saying, everybody’s got to buy home. Well, I do believe that because I think home ownership is probably the, well, not probably it is the number one way for, for people on the lower economic scales to move up in economic scales is home ownership, home ownership versus renting is definitely affordable housing.

Tracy:

Right. Right. And so the difference for sure don’t

Tego:

Know where I was going, but I got a little off track there. Cause I’m so passionate about that whole idea, that home ownership is, is a big deal. And I know what it was, Tracy is, you know, if you’re ready to buy then. Yeah. Yeah.

Tracy:

And if you find the right one, so you can say, I’m going to wait six months, but if the right house becomes available and you’re able to see it and make an offer and get it, then go for it. Right. Right.

Tego:

And if you’re not ready, that’s, that’s fine too. You know, and if you don’t know, where are you going to be living a year from now? And maybe, maybe our Albuquerque, isn’t where you’re going to be. That’s

Tracy:

Fine too. Of course it would be a great rental house. If you decide you need to leave. But you know, the whole thing is don’t let the fear hold you back. I think, I think a lot of us have this fear and we let it tell us ourselves not to make good decisions because it’s thinking the things that protecting us. Yeah.

Tego:

Well, it is, it is. And, and, you know, logic, what did they say? Logic is great, but it doesn’t motivate us to decisions. But for me, I need to see the numbers. And when you look at the numbers at renting versus owning that the math is clear as is owning is always a better long-term investment. If you’re planning on being there for a few years, right. Or more so for sure,