by Cynthia Wall

Created on: August 24, 2008   Last Updated: August 27, 2008

In 1993, a loaf of white bread cost 75 cents, a pound of ground beef was $1.55, and a jar of peanut butter was $1.88. A new home cost 147K and the interest rate on a 30 year fixed loan cost between 7 and 8%. The average wage was 29.5K.

In 1998, white bread was 86 cents, ground beef was $1.40, and peanut butter was $1.80. A new home cost 181K and the interest rate on a 30 year fixed loan was between 6 and 7%. The average wage was 32.7K.

In 2008, white bread is $1.28, ground beef is $2.25 and peanut butter is $2.00. A new home on average costs 227K and interest rates are between 5 and 6%. The average wage is 40.3K.

They're all just numbers until you figure out what they mean to you. Okay, so bread has risen 70% in 15 years; beef by 45%; a new home by 54%; and your wage by 36%. Meanwhile, the mortgage interest rate has dropped by 25%. Interest rates are very low by historical standards. The reason consumers are feeling the pinch is that the price of goods, especially fuel, has risen faster than their wages. This year has been unusual in that home prices have declined. The projection is that they may remain at this level for another year before beginning their climb again. If you look back at home prices for the last 50 years, you will see that like the stock market, the trend upward has been consistent even if not in a straight line.

The house we bought in 1974 for 43K at 9 and percent interest is now worth 600K. The house we bought in 1993 for 210K is similarly worth 600K. Real estate is real; land is for keeps which is why it's such a valuable investment especially in difficult financial times. Low interest rates are giving first time buyers a chance to invest in a home which will become the rock base of their financial future. If buyers are cautious to not buy above what their salaries will support, resourceful in searching out the best interest rates, and knowledgeable about getting secured loans with guaranteed rates, now is the perfect time to buy even better than it was 15 years ago when a peanut butter sandwich cost half of what it does today.

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