Assignment Problem:
As most of us know if buying real estate, such as a house to live in, it is expensive. BUT that does not mean the "price" or value of real estate is always going up, it goes down, too.
As we cover some financing rules in this class, I thought I'd offer a "fun" contest -with extra credit possible- to see if you can determine the amount at which a recent sales transaction took place. Over the last 18-24 months, we've seen prices of real estate sky rocket. There are a variety of reasons for that, not the least of which was major companies trying to "flip" houses - operating like a used car dealer does. As businesses, they would try to buy a person's house for less than the big company can immediately resell it for. That increased demand (purchasers other than just those normal home buyers looking for a place to live) by natural economic principles - increased prices.
HOWEVER, one of the chief costs of purchasing real estate, since most have to borrow money to pay for it, is how much a buyer might have to "pay" to borrow the money. That's known as "interest" and it's typically stated as a % per year you must pay in addition to paying back the loan. SO, say you have a $100,000 loan at 5% (and assume you don't pay any portion of the loan back during the year). Over that year, you'll pay the lender a "price" for that loan of $5,000. If interest rates rise to 6%, the "price" increases to $6,000 per year, meaning you have to either get a job paying you more money-or cut "costs" somewhere else such as buying less food, paying less for a car, etc. etc.
Over the last 3 months I've seen loan interest rates increasing (something the government has an amazing amount of control over). The result is the "cost" of home ownership is increasing, and prospective buyers have less money to "pay" for a house. This is causing an amazing number of seller's to "lower" their initial asking price for their properties.
OK, now that we've covered the simple economic principles, here's your turn to "guess" what you think a recent house sale went for. I'm going to describe the property (not give you the address) because the latest sales price is typically a matter of public record, and easily available on sites like Zillow, if you know the exact address. Thus, I'm going to just give you a description. After doing your research, simply submit the number (in dollars) you guess the house sold for. Your submission will be part of this "assignment"
The student who is closest to the actual price will receive 20 points! Everyone who participates automatically receives at least 5 points. If you come in 2nd or 3rd, you receive 15 points, and if you are within at least 50% of the price, Make sure you get your "guess" in by 11:59 p.m., Friday, October 14, 2022. Here is the property description.
This house is in a gated community with HOA (Home Owners Association) dues of $215 a month. It is a one story single family house which has 3 bedrooms and 2 full baths. It is a total of 1,888 square feet of living space. It has an attached 2 car garage. It was built in 1989. It is built on a "slab" foundation, made of wood with wood (not stucco) siding. It also has a "zero lot line" on one side (for definition of Zero Lot Line) (the 3 most important things in real estate are, "Location, location, and location) is inside the City of Roseville with a zip code of 95661. The area where this property is located is bounded by the following major streets: Douglas Blvd, Rocky Ridge Dr, McLaren Dr, Parkhill Rd, and Roseville Parkway.