According to many local builders and realtors, a home that sells for $200,000 is now considered to be an affordable home in Lake and Sumter counties. If this is the case, then many young families and working people in this area will never own a home. This is truly a sad commentary about the state of housing in our community and country.

Older Americans are typically less sympathetic to the plight of young people owning a home because many of them made real sacrifices and struggled with a mortgage in their time. However, housing costs for many young people have become so unrealistic given the stagnant growth in wages during the last decade that many of them cannot even conceive of home ownership.

The purpose of this column is to inform the younger and older generations as to how big the number has grown. According to the Orlando Regional Realty Association, the median price for a first-time home buyer in September 1989 was $68,769. As of the second quarter of 2018, the median sales prices in Lake County jumped to $234,278. That’s a whopping 340 percent increase in price!

To put pen to paper and give a real accounting to the cost, let’s take a fictional family — the Jones Family — a couple with two children. They are purchasing a home in Lady Lake that costs $200,000. Mr. Jones is a policeman and his wife is a teacher. They have a combined household income of $95,000 and good credit scores. They have saved $10,000 for a down payment and they want to know the amount of their monthly payments.

At their loan closing, Mr. and Mrs. Jones could face up to $7,766 dollars in fees, escrow, inspections, and recording costs. For many first-time homebuyers the closing costs can be deal killers because it seems as if everyone has their hand out.

Then there is the monthly note calculation. The property taxes for a $200,000 home in Lady Lake (based off the Lake County Property Appraiser’s calculations) cost $2,485 per year. The base homeowner's insurance with sinkhole coverage in Lady Lake costs $1,246 per year. Because the couple could not put down 20 percent of the purchase price ($40,000) at the time of their loan closing, they will be subject to Private Mortgage Insurance (PMI), which runs from 0.5 percent to 1.2 percent of the loan. At the best rate, the couple will be charged $79.17 per month PMI until the 99th payment, which satisfies the 20 percent equity rule.

Before the actual mortgage payment, Mr. and Mrs. Jones will pay $390.09 each month in taxes, insurance and PMI. That is a huge monthly payment in itself!

If Mr. and Mrs. Jones have good credit and qualify for a 30-year mortgage at 4.52 percent, their loan payment amount will be $1,016. This would mean their total monthly mortgage payment for 30 years (including taxes, insurance and PMI) would be $1,407 per month. This is an estimate and could vary somewhat either way, but you get the picture. Plus, as property taxes and insurance go up annually, so will their monthly mortgage payment.

You tell me — how many working families have the means to come up with a large down payment, closing costs, and commit to paying $1,407 per month? These hidden costs are the reason why so many families are forced to rent or live in substandard housing.

These high prices are also the reason why young families are at a disadvantage as compared to their parents or grandparents in ever owning a home.

Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc., and he is also the host of the “Around the House” Radio Show heard every Monday at noon on My790AM WLBE in Leesburg.