San Juan Islands Home Prices, Closing Costs Rise

The Median Islands Income Can’t Cover Costs of Median Home Price

Contributed Photo. Merri Ann Simonson.

By Mer­ri Ann Simon­son, Man­ag­ing Bro­ker, Cold­well Banker San Juan Islands Inc

The cost of con­struc­tion, sell­ing and buy­ing real estate in the islands has con­tin­ued to increase based on the require­ments to meet the cur­rent reg­u­la­tions, over­all mate­r­i­al and ser­vice cost increases.

One could say that it costs more and takes longer to com­ply with the var­i­ous reg­u­la­tions that gov­ern the real estate and relat­ed con­struc­tion industries.

Based on the medi­an home price of $675,000 dur­ing the last 12 months, a cash buy­er will spend an aver­age of $13,500 in basic clos­ing costs.

That includes their half of escrow, title insur­ance for their lender, record­ing fees, 1% land bank tax, ½% afford­able hous­ing tax and home inspec­tion fee. It doesn’t include the pro­rat­ed tax­es, insur­ance, homeowner’s dues, loan clos­ing costs or well water testing.

If the buy­er needs a loan, they will have month­ly pay­ments of $3,651 based on a $135,000 or 20% down pay­ment, 3% inter­est and a 30-year loan. The month­ly pay­ment includes prin­ci­pal, inter­est, tax­es and insurance.

The pay­ments would be high­er if there are HOA dues or have mort­gage insur­ance if the down pay­ment was less than 20%. Gen­er­al­ly, our real estate tax rate is $8.03 per $1,000 of assessment.

A buy­er would need to make around $87,642 annu­al­ly or $7,300 per month to qual­i­fy with a ratio of 50% in order to pur­chase a $675,000 home. ($3651 x 2 = $7301 month­ly income need­ed x 12 = $87,625 annu­al income).

This income require­ment cal­cu­la­tion is only based on the prin­ci­pal, inter­est, tax­es, and insur­ance and assumes this buy­er has no reoc­cur­ring deb­it, such as charge cards, car loans, HOA dues or mort­gage insurance.

This is typ­i­cal­ly not the case. Even if you pay your charge cards in full each month, the under­writ­ers will use a min­i­mum pay­ment amount in the calculation.

The San Juan Coun­ty Annu­al Medi­an Income is $33,216 for an indi­vid­ual and $63,622 for a household.

Read more at sanjuanislandslifestyle.com/blog.

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