The Exciting New Buyer Math!

It is becoming pretty well established that we are in a buyer's market in Manhattan, but what does this mean exactly in dollars and cents for a prospective home buyer in 2009? Time to do a little math! Let's say that Brenda Buyer was looking to purchase a $700,000 one-bedroom condo in early 2008. She was going to put $200,000 down, and take out a mortgage of $500,000. The common charges and taxes were roughly $800.00 a month. Mortgage interest rates in early 2008 were hovering around 6.5%. If she bought last year, Brenda's monthly carrying costs would have been around $3960.00 a month ($3160.00 mortgage payment plus $800.00).

Let's flash forward to the present. The same apartment that Brenda was mulling over last year is now selling for around $600,000. Let's say the monthly common charges have gone up 10% to $880.00. If Brenda puts the same $200,000 down, she would only have a mortgage of $400,000. In addition, mortgage interest rates have now dropped below 5%. Brenda's monthly costs if she buys in 2009, a mere $3020.00 ($2140.00 mortgage payment plus $880.00). All told, Brenda will be saving approximately $940.00 a month, or more than $10,000 a year ($11,280.00 to be exact). Exciting math indeed!