It’s hard to believe, but they purchased this home for a little over $32,000 in the early 70’s! Today, after running comps, it would probably sell somewhere around $850,000. I’m still having a hard time wrapping my head around this. Now, you right, they have put a lot of money into this home over the years in maintenance, upkeep, additions, yardwork, updating, remodeling, including insurance expenses, taxes and so on. So, these numbers do not represent their profit if they were to sell. When we are strictly looking at home price, this would be an increase of 2,556 percent! That’s over 56 percent per year increase in price! That’s crazy!
Now this property was financed at around 6%. Their total cost, including interest would be around $65,000 over 30 years. Still not too bad. Assuming they sold the house at $850,000, and assuming the new owner would also finance it over 30 years, 20% down at the current 3.75% interest, the total cost would be $1,133,763.00. Again, if we just include the cost to purchase the house, this is an increase of 1,644 percent!! Or about 36.5 percent increase per year! I am not making this up… (The difference being that interest rates are a lot lower today than in the 70’s).
Future
Let’s take this a step farther and see what it would cost to buy this house in 45 years from now if this trend continued at this same rate. You better be sitting down for this. In 2064, this house will be worth a little over $22 million! What? That’s very hard to believe but I bet back in the 70’s they never would have believed this house would be worth $850,000 in 2019…
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