Let us say that the Fed does drop rates AND stops the use of ARMs. This is a long shot, but let us look at the numbers.
The median price home = 533,000.
The interest = 3%
Payment = 2,247 – 30 year fixed
This does not sound very bad! Let us all buy!
Wait!!!
Can we afford even this?
How much do we need to make to afford this median home?
2,247 * 12 = 26,964 yearly payments
monthly payment * 12 months = money spent on housing in a year.
26,964 / .03 = 89,880
msohiay / 30% fundamental amount that should be spent on housing = yearly income.
AAAAAUUUUHHHHHHHHH!!!!!
I still can’t afford the median price home!
With a 20% down it will work, but I would rather a low house price and high interest vs. high house price and low interest. Cut the price in half and not the interest rates.
