Written by Barbara Zorn | 04 February 2010

According to the Florida Association of Realtors, the median sales price of existing homes was $105,800 in April of 2002. Surprisingly, in November of 2009 the median sales price was $105,000. Some economists are saying we have stabilized while others are spouting doom and gloom. The year of 2002 was a typical real estate sales climate for Brevard County. Will the possible unemployment at the Space Center hurt us and how much? Don’t we all wish we had a crystal ball? If you are thinking of selling, you need to assess the market and price your home to sell in today’s market.  And maybe now is a better time to sell since no one knows where this market is going.

On the other hand, should you buy? Let’s talk some simple math.

Mortgage Amount                 $100,000         $90,000           $80,000

5.375 %                                  $559.97           $503.97           $447.98

Mortgage Amount                 $100,000         $90,000           $80,000

5.375 %                                  $559.97           $503.97           $447.98

7.375%                                   $690.68           $621.61           $552.54

If you have a $100,000 mortgage at 5.375% interest, the first 6 months of interest payments are roughly $2700.

If you are in a 22% tax bracket this means that your tax liability is reduced by $594.

If you were to buy today and get a $100,000 mortgage your monthly payment would be $559.97 (plus taxes and insurance). Let’s say prices decrease by 10% in 1 year which means you would only need to get a $90,000 mortgage. If the interest rates are the same you would save roughly $50 per month or $600 for in your first year of ownership. However, that is before taking the tax write off into account as well as the tax credit that the government is giving as part of the stimulus package. The interest you would pay on the first year of a mortgage is $5,341. Let’s assume that you are in the 22% tax bracket.  This means you would either get a refund or would not have to pay $1,175.02 in taxes. So- do you want to wait for the prices to drop possibly 10% and save only $600?  Or would you rather buy now and save $1,175.02? Even if you do this

same math assuming a 20% drop in prices- the money is almost a wash.

Then let’s assume the same drop in home prices, but accompanied by an increase in interest rates. If this happens you have definitely lost any gains achieved by the drop in prices. If today you can get a $100,000 mortgage but next year you only need an $90,000 mortgage but the interest rate is up just 2% you will be paying almost $75 more per month. Do not discount the impact that interest rates have on your home buying decision.

Now let’s factor in the government stimulus money. Right now a first time homebuyer will get up to $8,000 in tax credit. This is not a tax deduction off your taxable income- this is a true credit which is a dollar-for-dollar reduction in the amount of tax you owe.  This means that if you owe $2,000 in taxes the government is going to send you a check for $6,000. This money is only available if you are under contract by the end of April 2009.  For more specifics read my 11-20-09 blog entitled “Uncle Sam Pays You to Buy a House” right here on BrevardCounty.com

Not a first time homebuyer? The government still wants to encourage you to purchase a home by

giving you $6,500.  Again- read my previous blog for more details.

Whether you are buying or selling you need to look at all the numbers that impact your decision. Just like the stock market sometimes real estate is up and sometimes it is down but your individual needs should be the first thing you look at before making any major decisions. Remember real estate is a long term decision. Try to buy low, like today, and sell high like the year 2005- but also know that in the long term history of the United States most people’s wealth has always come from real estate. Every year that you own your home versus renting someone else’s you are building up equity and one day you will have a piece of property that you own free and clear. And one of the best parts about real estate investing is the fact that it is something tangible that you can feel and touch and live in and enjoy (unlike stocks where a company can go out of business and your investment is gone forever).

Barbara Zorn is a real estate agent in Brevard County. She currently ranks #1 in Brevard for both volume and unit sales in 2009 and in 2008 she took