| Comment | A home is worth whatever someone is willing to pay for it.
If the HR value is consistent with that, then that's a lucky coincidence.
If the HR value is consistently less than what places are selling for, then it's the HR value that is wrong, as it is supposed to reflect market value.
Also remember that on a 3% mortgage over 25 years you will pay back 50% of the value of the property in interest anyway.
And then also take into account avoided rent costs.
Essentially, for all of the above reasons and more, using % over HR as a metric doesn't really make any sense. Unfortunately it's what mortgage companies use as part of their lending criteria, but it doesn't really mean anything. |
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