My son had a homework assignment this past weekend to visit several apartments and get information on rental rates and move-in fees. Since I’ve never lived in an apartment in my life, I jumped at the opportunity to drive him around and get educated.
We focused on areas that he would be able to get public transportation from easily and that were in our current neighborhood (McCormick / Gainey Ranch). The message we got loud and clear was that people are most definitely looking for rentals now. In every case, there were apartment hunters in the office waiting for assistance. We discovered that apartment selection was limited, too.
In the last office, the person helping us was actually the bookkeeper who shared that she was helping out because business was so brisk. She said that the building owner periodically did mailings and whenever he did, that they would be swamped with business.
Rental rates being charged were in the range of $850-1150 for a one bedroom apartment and $1000-1250 for two bedroom models.
So, being Mom, the Realtor, I just had to run the numbers. What would it cost monthly to purchase a condo in the same area?
In the 85258 zip code, I found a one bedroom condo listed at $125,000. HOA fees are $144/month. Property taxes were $461 in 2006. Condo insurance, say $250/year. Just assuming that 100% financing were available, at 6.5%, on a 30 year fixed mortgage, the principle and interest would be $790.
So, (estimated) monthly expenses would be:
Principal & interest $790
Property Taxes $38
Condo Insurance $20
Total monthly $992
And of course, this monthly cost (investment) will be less, since I would have a down payment to reduce the loan amount.
Today, there are 38 one-bedroom condos listed in the zip code 85258 (which encompasses the McCormick Ranch and Gainey Ranch communities). Prices range from $125,000 to $344,900. Two bedroom condo range in price from $184,000 to $659,000, and 90 are listed.
I just took a quick look at condo sales in area. Year to date for 2007, the average sale price for the 28 one bedroom condos that have sold has been just over $167,000, or about $200 per square foot. As for two bedroom condos, 112 have sold since the beginning of the year for and average price of $255,000, or $212 per square foot.
This is where I call my tax guy and ask him to run the numbers. There’s a tremendous selection of homes on the market right now. Although we’re a couple years off from having to make an independent living decision, there are some excellent opportunities now. I don’t have a crystal ball, but it does seem that buying a condo now may be the right thing to do, especially with the increased number of renters in the market. Time to do my homework.