With Santa Clarita Housing Prices Going Up, Can You Still Afford to Buy?

Despite an increase in Santa Clarita Valley property values, nominal interest rates give home buyers more bang for their buck.

It’s true; housing prices are on the rise in the Santa Clarita Valley. The real estate industry is bouncing back after experiencing serious setbacks during and after the so-called “Great Recession” that reared its ugly head around 2008. The rise in property values in the last 12 months have reached the double digit percentage-wise in most markets, with areas such as Phoenix, Arizona experiencing a rebound of 23%. That being said, where does that leave home buyers who are still looking for a deal?


Buying a home isn’t just about price, it’s about affordability.

As we mentioned above, while housing prices are on the rise, interest rates are still at historic lows. Most lenders are still offering 30 year fixed mortgages with interest rates at less than 4%, with even lower rates available for 15 year or 5 year ARM (Adjustable Rate Mortgage) loans. When considering a home purchase, lenders take into account the amount you can actually afford in a monthly mortgage payment (The “principal”) along with interest, taxes and insurance. The entire amount is referred to as “PITI” (Principal, Interest, Taxes and Insurance). While qualifications and approvals vary from lender to lender, in most cases buyers with good credit may qualify for a home loan at these historically low rates. So let’s say you’ve done your proper diligence beforehand and are preapproved for a loan at 3.9%, this means that your monthly principal and interest payment would be under $1700 on a home loan valued at $350,000. This payment does not include taxes, insurance, or mortgage insurance (Mortgage insurance is required for borrowers who are acquiring a home loan at 100% of its value with no money down). The same home’s principal and interest payment is reduced to just over $1300 per month with a 20% down payment.

Comparing a home purchase to a home rental.

As you can see from the above examples, it may seem that you are better off purchasing a home, even with a lower than 20% down payment, than you would be by remaining in the home you are renting. Remember that while the lowest interest rates will be granted to those with higher credit ratings, there are many loan programs available to buyers with less than stellar credit that will still provide them with a loan at a nominal rate.

Don’t forget that there are other benefits to home ownership over renting a property. While deductions of property tax and mortgage interest most certainly being a great incentive, as an investment, your home will gain value through equity. Being smart with your budget and loan options, and holding on to your property as not only a place to live, but as an investment to be held in the highest regard, making a home purchase is a much smarter choice.

You have questions, we have answers! Our team is experienced with home buyers on all levels. We are also networked with several home mortgage lenders who can start you on the path to obtaining a home loan so that you can experience the American dream of ownership while making one of the best investment decisions available. Contact us at the numbers listed above, or shoot us a message using the form below. Remember, our services to home buyers is always FREE!