[tophcfa]

Originally Posted by ThirdOfFive

It isn't just price that is the determinant. Interest rates have as much or more to do with the slowdown in sales, particularly for those who cannot afford to pay cash for a home here.

Some rough-and-ready examples (courtesy of mortgage calculator website:

$500,000 home, 20% down, interest rate 7.5% = monthly payments of $2796.86
$600,000 home, 20% down, interest rate 2.5% = monthly payments of $1896.58
$700,000 home, 20% down, interest rate 2.5% = monthly payments of $2,212.68

These numbers don't give an exact figure, but are ballpark; they also don't include things like insurance, bond, etc., which raises the monthly costs. But it is a good approximation.

By all reasonable measures interest rates really aren’t high. Interest rates are supposed to be set so responsible savers and investors can earn a real rate of return above inflation. Since the housing market crash of 2007/08, the Federal Reserve long time irresponsible monitory policy of artificially low interest rates created a society dangerously addicted to unsustainable debt. Current interest rates are around long term averages if the period of artificially low rates are excluded. Housing values should adjust to reflect the Federal Reserve returning to doing their job responsibly.