This is a Real Estate Development question in mortgage/ Finance questiononly experts, pleaseyour...

Question

This is a Real Estate Development question in mortgage/ Finance questiononly experts, please

your target market is households with incomes of $175,000 to $200,000. If you assume these households can pay closing costs and have in all cases enough for a 10% down payment and that mortgage money is available, what housing prices can they afford? What would this price imply for the cost of raw land and developed lot prices? How would changes in interest rates make this different? This is a small group project. Think about debt-to-income ratios and raw land as a percentage of total development costs. This is normally 15% to 30% BUT varies greatly!!!!

real-estate-dev-module-2-a5nigebn.docx

Ishmeet Singh · Accepted Answer

Simulation as per case
	SCENARIO MANAGER:
		CALCULATIONS:
			Income	187500
		Source: JP Morgan Report	Housing Prices	463000
			Therefore, in loan terms:
			PV	463000
			Nper	10
		Source: usbank.com	Rate	2.38%	238
			Annual Installment	$52,574
			Constraint:
			Closing cost:	10% of income
				$18,750	easily payable in pmt from these households
			Difference	$33,824
			Check	Not in Budget
		Amortization Schedule:
		Monthly rate	0.1983%	Nper	120
		Time	Debt Amount Remaining	Interest	Principal
Component	PMT	Principal Left
		1	463000	918.28	$3,421.19	$4,339	$459,578.81
		2	$459,578.81	911.50	$3,427.98	$4,339	$456,150.83
		3	$456,150.83	904.70	$3,434.78	$4,339	$452,716.05
		4	$452,716.05	897.89	$3,441.59	$4,339	$449,274.46
		5	$449,274.46	891.06	$3,448.42	$4,339	$445,826.04
		6	$445,826.04	884.22	$3,455.26	$4,339	$442,370.79
		7	$442,370.79	877.37	$3,462.11	$4,339	$438,908.68
		8	$438,908.68	870.50	$3,468.98	$4,339	$435,439.70
		9	$435,439.70	863.62	$3,475.86	$4,339	$431,963.85
		10	$431,963.85	856.73	$3,482.75	$4,339	$428,481.10
		11	$428,481.10	849.82	$3,489.66	$4,339	$424,991.44
		12	$424,991.44	842.90	$3,496.58	$4,339	$421,494.86
		13	$421,494.86	835.96	$3,503.51	$4,339	$417,991.35
		14	$417,991.35	829.02	$3,510.46	$4,339	$414,480.89
		15	$414,480.89	822.05	$3,517.42	$4,339	$410,963.47
		16	$410,963.47	815.08	$3,524.40	$4,339	$407,439.07
		17	$407,439.07	808.09	$3,531.39	$4,339	$403,907.68
		18	$403,907.68	801.08	$3,538.39	$4,339	$400,369.28
		19	$400,369.28	794.07	$3,545.41	$4,339	$396,823.87
		20	$396,823.87	787.03	$3,552.44	$4,339	$393,271.43
		21	$393,271.43	779.99	$3,559.49	$4,339	$389,711.94
		22	$389,711.94	772.93	$3,566.55	$4,339	$386,145.39
		23	$386,145.39	765.86	$3,573.62	$4,339	$382,571.77
		24	$382,571.77	758.77	$3,580.71	$4,339	$378,991.06
		25	$378,991.06	751.67	$3,587.81	$4,339	$375,403.25
		26	$375,403.25	744.55	$3,594.93	$4,339	$371,808.32
		27	$371,808.32	737.42	$3,602.06	$4,339	$368,206.26
		28	$368,206.26	730.28	$3,609.20	$4,339	$364,597.06
		29	$364,597.06	723.12	$3,616.36	$4,339	$360,980.70
		30	$360,980.70	715.95	$3,623.53	$4,339	$357,357.17
		31	$357,357.17	708.76	$3,630.72	$4,339	$353,726.45
		32	$353,726.45	701.56	$3,

your target market is households with incomes of $175,000 to $200,000. If you assume these households can pay closing costs and have in all cases enough for a 10% down payment and that mortgage money...

Answer To: your target market is households with incomes of $175,000 to $200,000. If you assume these...

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