Gerstner illustrates demand destruction: $1,200 monthly payment bought $350K house in December, now only $295K.
“Just the increase in the thirty year mortgage means you're buying power in December, four months ago, to buy a house and you if you could afford $1,200 a month, that buying power bought you a $350,000 house. Today, it buys you a $295,000 house.”
Gerstner shows home affordability fell from $350,000 to $240,000 for same monthly payment.
“Somebody who can afford to pay $1,200 a month in December could afford a $350,000 home, today can afford a $240,000 home.”