Another Edmonds Buying Scenario
In our previous article on the financial demands of an Edmonds home, we crunched some numbers to give a sense of the financial capabilities a buyer must have to afford a median value Edmonds home with a 20% down payment. After crunching these numbers, we took away a couple of different insights. For one thing, it was encouraging to see that saving up for a down payment of 20% on a median value home in Edmonds isn’t too difficult for someone earning a median household income. However, it was less encouraging to see how much income a buyer in this scenario would be left with after taking out takes and the fixed monthly payment. This scenario indicates that a monthly payment following 20% down is doable, but would be potentially stressful for the buyer to manage.
What would happen if we changed things around a bit, and put down 30% on a median value home in Edmonds? Would things be substantially more manageable for our hypothetical buyer? How long would it take a typical buyer to save that amount if they’re earning at the median household income level? Let’s answer each of these questions in turn.
New Scenario: 30% Down on a Median Value Home
Currently, the median home value in Edmonds is about $605,400. This means that a 30% down payment would translate to a sum of $181,620. A median household income in Edmonds is about $83,000, which translates to about $5,300 after taxes on a monthly basis, or about $63,600 on a yearly basis after taxes. If we suppose that our hypothetical buyer is able to save aggressively, putting away 33% of after tax income, this means that the down payment could be saved in a bit under 9 years. This of course assumes a starting point of zero. After making the 30% down payment of $181,620, this would leave a monthly payment obligation of about $2,801. This would leave our buyer with about $2,500 after the monthly payment. As per usual, this is assuming a 4% interest rate on a standard 30 year fixed-rate loan, and including property taxes and homeowner’s insurance. Even though our buyer would still benefit from more of a cushion when it comes to the monthly payment, this scenario is much more manageable than the previous one.
When we consider how long a typical buyer earning at the median level needs to save up for this down payment, things start to look a bit less encouraging. If it takes nearly 9 years to save the down payment – and that’s assuming a very aggressive saving ability – we’d like to see a financial situation which is a bit less onerous on our hypothetical buyer. But, as with the 20% scenario, this is still doable. It does well to illustrate the kind of demands placed on buyers in the Edmonds market, however.
Image credit: liz west