Which is the best deal, a CD or buying a home in Knoxville?
That’s sort of a hard comparison to make but follow this train of thought and see if it makes sense to you.
In the 1st quarter of 2005 the average price of a 3 bedroom home in Knoxville, Tennessee was $141,700. In the 1st quarter of 2008 the average price of that same 3 bedroom home has increased to $158,300.
Assuming a buyer put 20% down on the 2005 home that would have been $28,340.
If you took the same $28,340 and bought a CD at a local bank or credit union at the best rate I’ve found, which is 3.6% for a $100,000 CD or above (I’m giving the higher number to the CD) you would have earned $3,172 in interest.
$$$$$$$$$$
Your $141,700 house you bought in early 2005 would have now been worth $158,300 which means you would have $16,600 in equity AND you would have been enjoying living in your own Knoxville home the past 3 years.
So which is the best deal; $3,172 interest (taxable by the way) on a CD and no house or $16,600 in equity and a new, 3 bedroom home for you and your family to enjoy?
PS, contrary to all the “Doom & Gloom” stories you’re bombarded with daily on the news; not all the US real estate markets are losing value and undergoing massive foreclosures.
In fact around many cities the housing market is moving along pretty well; Knoxville, Tennessee is one of those cities.
We’ve never enjoyed (if that is the right word) 10% appreciation monthly in home prices like southern California but we’ve also never experienced 50% price and value declines either.
Here’s a great place to look for your own 3 bedroom home to live in and probably enjoy an increase in value over the next 3 years and beyond, www.KnoxvilleHomeCenter.com
