If you missed buying a Fair Oaks home back in '02, those prices are back! After a high of $250/sf (per square foot) in August of '06, Fair Oaks prices have dropped approximately 38% to a stunning $155/sf. That is lower than the cost to build a home, yet it includes the land! We have not seen such a buying opportunity for a long time.How does that compare to the hit the entire county has taken? Has Fair Oaks done better or worse? Much better, thank you. During the same time period, Sacramento County price per foot dropped a whopping 54%! EEKKK! They went from a peak of $250/sf in August of '05 to the current level of $117/sf.
But here's the best news for buyers. Interest rates make this the most amazing time we have ever had to buy. If you get a $200K loan today, you will pay around 5% interest, or $1073/month, (principle and interest on a 30 year fixed rate loan). Look what happens if the interest rate were higher on the same $200,000 loan.
5% = $1,073 today's rate
6.25% = $1,231 (2002 rates)
8.5% = $1,537 (2000 rates)
9.25% = $1,645 (1994 rates)
15% = $2,528 (1984 rates - yeouch!)
An interesting side note, is that in '02, when Fair Oaks prices were at today's level, the ensuing 3 years saw prices jump an incredible $100/foot. That means if you owned a 2,000 sf home in '02, by '05 it was worth $200,000 more. That's pretty amazing! Will that happen again? No one really knows. And in my experience, it's not predictable... but it IS possible.
So what does all this mean? It means homes are dirt cheap, and that Fair Oaks has been a much better value than the county in general. And compared to the stock market, it's not so bad. There are those that say today is the best buyer's opportunity we will see in our lifetime.
Flickr photo by fpsurgeon
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