PITI (principal, interest, taxes and insurance). These four outlays, together with the down payment, constitute the key financial components of buying residential or commercial real estate. Over the last several years, these costs have seen significant increases, making homeownership less affordable for more Americans.
However, there may be some relief in sight for new buyers, as home prices begin to stabilize and changes in Federal Reserve Board polices suggest that interest costs may have peaked. Unfortunately, rising insurance premiums, and a variety of factors that may lead to higher property taxes, are likely to combine to materially increase continuing costs for new and existing home owners.
Investors in general, and those interested in acquiring commercial and residential properties, should be aware of both initial and continuing costs associated with real estate assets.
All comments and suggestions are welcome.
Walter J. Kirchberger CFA
