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Comment by jlhawn | Hacker News Reader

"House-Price" is a terrible metric that only house sellers really care about. Everyone else is more concerned with monthly total housing costs. If house prices stayed the same and interest rates increased 2-3x that means monthly payments for new mortgages also increase. Buyers are unable or unwilling to pay the higher monthly cost so they bid less and the price comes down but their total monthly payment does not decrease.

In some sense this is a transfer of wealth from home owners/sellers to banks/lenders and hopeful and prospective first time buyers see no benefit, aside from maybe smaller down payments.

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When you’re talking about the price of the most expensive purchase most people will ever make, it seems like house owners (around 2/3 of American households) would be quite interested in the topic.

First-time buyers benefit from both the decrease in down payments and the easier ability to pay down principal as nominal salary grows and/or if interest rates fall during the mortgage term.

Sure, but I think the point is that a perspective home buyer ultimately rationalizes the cost with monthly payments. It is harder to wrap your mind around paying, lets just say, $500,000 over 30 years as compared to paying $1,300 monthly. When your considering purchasing a home and how that relates to your budgeting, a flat $500,000 over 30 years is meaningless compared to, okay, this is how much money will be going out of my bank account each month.

When I buy a car, I don't think of it in terms of $20,000 over 5 years. I think of it in terms of $350/month over 5 years.

In a market where sellers have an advantage over buyers, buyers have to compete using the highest monthly payment they can afford which allows them to pay the highest price for the home to outbid other buyers.

But outside of that type of market, buyers are not trying to pay more for a house just because they can afford a monthly payment.

At least in CA your property tax is, roughly speaking, based on the last sold price. The lower the price the higher percentage of it is covered by your savings.

Homeowners care about "house price" because they're leveraged up all the various possible wazoos.

A house going down 10% on a normal mortgage is a 50% loss to the buyer (half the 20% down).

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