That house cost much more than the purchase price

A 250,000 dollar house will cost more than half a million dollars and it will take most people most of a lifetime to pay for it. This is what a 30-year mortgage looks like these days:

Principal $250,000.00
Interest $323,604.54
Total Cost $573,604.54


It is true the house costs more than twice as much as the amount borrowed to pay for it. Sure most people will have a down payment so let’s assume that the buyers paid $275,000 for the house and had $25,000 for a down payment.  That house of course is below the median for the area.

The monthly payment on the loan is close to 1,600 without including property taxes which in St. Paul will add up to a few hundred dollars a month or homeowners insurance which will also add a couple hundred dollars a month to the payment. Go ahead and add $500 to the payment.

There all also monthly utility costs and maintenance expenses. Houses do have to be heated this time of year. The smaller the house the lower the heating and cooling costs and maybe the maintenance costs too.

Renting is often even more expensive if we compare comparable properties. Generally speaking, the owner needs to make a profit. It is becoming harder to pay the rent and save up to buy a house. We call it “rent trapping”.

Housing is expensive. There really isn’t any other way of looking at the numbers.

Home buying is definitely slowing down. Some of it is because of the season and some is due to the interest rates that have gone down but are still more than 6.5%. First-time home buyers in particular are facing a brutal market.

Let’s hope that rates start going down or that wages go way up or that we find a way to create affordable housing. There is an urgent need for more housing in all price ranges.

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