Sunday, April 01, 2007

Is $579K in Penasquitos a good deal?

With an asking price of $579K this may be tempting in todays market, but when you disect the numbers and plot the history of this home, you quickly find out the next buyer (even at $579K) will be in for a rude surprise.
From 1988 to 1997 the rate of appreciation was about 3% per year, which is on pace with inflation. From 1997 to 2007 the rate of appreciation was about 18% per year. Not only is it unjustified it quite criminal.
That $175K home in 1988 with 3% inflation per year should be worth about $310K today, which looking at the house is quite reasonable.
Your Thoughts?