It's Cheaper to Own!

I have carried a mortgage payment rate-calculator card with me every day for the last 20 years. Printed payment calculators have become obsolete for years, but old habits are hard to break, and the card was handy.

Last month, however, I tossed the mortgage calculator card in the trash. Why? The interest rates listed only ranged from 5.5 percent to 10 percent, and with today's record low interest rates, the card was simply obsolete.

National Association of Realtors announced its December 2008 Housing Affordability Index level as being 158.8, which exceeds the all-time historic high of 155 set in 1972.

This extraordinarily high level of affordability reflects the favorable impact that decreased housing prices and lower mortgage rates have had on housing affordability. With the recent stimulus packages, housing affordability will likely only improve. Just as telling is a new survey that shows that renting a home is actually costing 12 percent more than owning a similar-size home!

So how do you translate the lower costs of homeownership into your sales presentation?

For first time homeowners, start by focusing on monthly mortgage payments rather than the purchase price of your homes. Smart new home sales professionals are displaying "monthly payment flyers" on the front door or prominently inside each spec home to show monthly out-of-pocket costs. Community price sheets should also include monthly principle and interest payments next to the the purchase price of each model. By showing customers they can save $250 per month versus renting, the cost of postponing a home purchase is hard to defend.

For customers with a home to sell, the benefits of great affordability are even larger. Make sure your customers understand the urgency that record-low interest rates mean in terms of affordability for potential buyers of their existing home. Convince customers that record affordability means now is the best time to list their home. Then take them through the exercise of how much more it will cost them to purchase their desired home if interest rates rose even 1 percent, and you'll find it's easier to get them to list their home at an attractive price.

Whether you're talking with a first-time or move-up buyer who's focusing on the mechanics of affordability, most buyers understand today's unique opportunity and will leave your sales office committed to acting on a new-home purchase decision.