An important guage of housing prices in any area is a comparison of the average sales price to the average income in the area.
The closest figure I could find was $56,084 as a median income for the Matanuska-Susitna Borough as a whole in 2004. So I am making a couple of assumptions to come up with a working figure. First, I assume that the household income is higher now than in 2004 and, second, that it is higher in Wasilla and Palmer than in the whole borough.
Let’s use $60,000 for an average household income, I think that it is a reasonable number…plus, it’s nice and round. For you in the Mensa Society, I do realize that median and average are two different things.
$60,000 divides nicely into $5000 of income per month. If we use the old standard that your monthly housing payments, (PITI), should be 30% of your monthly income or less, that leaves $1,500 per month to pay your Principle, Interest, Taxes, and Insurance, (PITI). This 30% standard has been stretched in recent years but it is a good safe standard to use. Pushing beyond that amount often puts people into financial difficulty.
Taxes are running at about 13 mils which equates to $1,300 for every $100,000 of assessed value, or about $2,990 for the average Wasilla-Palmer home. You can check out the taxes on any particular house on the Mat-Su Borough website.
As you can see from the following two charts, (click on them to expand), the average sales price for Wasilla and Palmer is about $230,000
You should be able to get insurance for about $900 per year for an average house in Wasilla or Palmer.
That equals $3,890 for taxes and insurance…plug it in to the mortgage calculator in the right column. You need to put the total amount for taxes and insurance in the tax slot.
The default on the calculator is 6.5% interest on a 30 year fixed loan. Don’t choose anything but a fixed loan unless your have very good reasons for doing so. You might be able to get a little better than 6.5% if you shop around. I mentioned an attractive quote just the other day in this post.
That equals a monthly PITI of $1770.93…oops…a little high. If you get 6% interest you can get it down to $1703.14 but you are still high. Play around with the mortgage calculator and you can find a price that equates to our magic 30% of monthly income figure of $1,500 per month.
Depending on how you play with the numbers the average price for the average household should be between $190,000–$200,000. Hmmm…no wonder most of the sales are under $200,000. But we certainly aren’t as high on the affordability scale as many parts of the country are. A starter home in Los Angeles for example is higher than $500,000 with an average household income of only $75,000. No wonder their prices are coming down to reality so quickly.
Can you get a house in Palmer or Wasilla for $200,000? You certainly can. Jay and I recently did a final walk-through on a just completed brand new three bedroom, two car garage home that we recently helped someone buy in Palmer for only $175,000. We both commented on how nice a home it was for the price.
Here’s a nice one on one acre for $179,900. You can get a lot of house for less than $200,000.
Give me a call on my cell (907) 232–7900 if you need help finding a home.