Do your clients get it?

Home affordability in the United States is nothing short of amazing. Even though current price trends for the United States and Canada are considerably different, the same principle applies in both cases: clients need perspective and they need to look beneath surface statistics before making informed decisions

The first chart below dramatically illustrates the impact of lower interest rates on housing costs, and the relative affordability of housing in the United States. The cost of a loaf of bread and a gallon of gas has more than tripled since 1989, and car prices have nearly doubled. While the median price of a new home has increased by 70 percent, mortgage interest rates, which stood at 10 percent back in 1989, are less than half of what they were back then. The impact of rock-bottom interest rates is that the monthly mortgage payment on a median priced home in the United States has increased by a mere $4 since 1989.

Unless a buyer is paying cash, the monthly payment tends to be a far more relevant number than the home’s actual purchase price. So for buyers who are waiting for home prices to hit the floor, before buying it’s important to point out that the possibility of a slight drop in the price of a home will have very little impact on the monthly payment, while even a slight rise in interest rates (a far more likely scenario) will have a significant impact.

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Published on KW Blog, May 2, 2011
by Gary Keller, Co-founder and Chairman
on May 2, 2011

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About janetnyc real estate

Merging Artistic Aesthetics with Luxury Real Estate Expertise Janet Zola Cruz has an artistic philosophy when it comes to real estate, believing that a client’s “picture” of the perfect dream home has everything to do with their decision to buy it. She should know. Janet not only sells Manhattan luxury properties, but has a MFA in Fine Arts from Brooklyn College, an Interior Design Degree from the Metropolitan Institute of Interior Design and is pursuing professional certification in real estate finance and investment from the NYU Schack Institute of Real Estate. Janet was born in Brooklyn but grew up on the island of Puerto Rico and developed a love of real estate from her father who was a contractor and investor in prime properties there and in Florida. Learning not only the skills of buying and selling properties, but how aesthetics play an integral part of consumer decision-making, her creative nature and keen business sense were the perfect marriage to propel her to success in New York. Janet has lived in New York--Long Island, Brooklyn and Manhattan--for over over 25 years. While pursuing her interests in the arts and in real estate, she founded her own freelance design company whose impressive client list included nationally-recognized companies in publishing, real estate and retail. Janet’s clients know her as an artistic soul with an extensive knowledge of Manhattan’s real estate industry. Buyers value her ability to interpret what in their “mind’s eye” and sellers consult with her on how to best stage their properties for optimum sales. View all posts by janetnyc real estate

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