Ok Former, that makes sense, sometimes people over estimate their tax savings because only the top portion is taxed at the higher percentage and there is a law of diminishing returns as you deduct into your lower percentage brackets but I ran my 2006 tax return using your numbers and it was close enough. Here’s where the psychology comes into play. The 100k earner who is renting is netting less than 5k a month after health insurance, 401k, etc. Without the panic over being priced out of the market and no sign of near term appreciation coupled with the real fear of price declines it becomes a bitter pill to swallow to take on a 3100 house payment even if the net payment is 2100, it just looks scary.

Based on your post I was forced to do some calculations and I can now afford what I am looking for but I can’t do it, I have to go with my gut and my research, I think you may find that when other areas find themselves more inline with fundamentals there will still be apprehension on the part of the buyer, or it could just be me.