Most people remain focused on the price tag of the property. Indeed, this obsession with list prices is deeply ingrained in the American psyche. But, of course, buying a home is very different from buying a product from a brick-and-mortar store or shopping online.

Unless a homebuyer is buying with all cash, they will take out a long-term loan to finance their purchase. And the cost of borrowing money is high - and that cost increases when mortgage rates rise.

Nationally, the median mortgage payment is now about 77% higher than it was a year ago*. The main reason for this increase is higher interest rates, with rates on 30-year fixed-rate loans soaring from a low of 3% to about 7%. This completely turns the affordability equation on its head.

Mortgage rates can almost determine a person's ability to purchase a home regardless of price.

In order to get those payments back to where they were a year ago, home prices would need to plummet 45% (assuming interest rates stay the same). Let that sink in for a moment. If mortgage rates rise to 8%, home prices would have to fall about 50% to get back to around last year's payments.

The likelihood of a 45% drop in home prices is overwhelming. Prices have fallen back a bit from their spring and summer peaks, but they are still rising each year.

Most real estate experts predict only about a 10% decline nationwide, although the exact amount is expected to vary widely across the country.

During the Great Recession, home prices fell only about 30 percent from their post-burst real estate bubble peak in the 2000s. This was largely due to subprime mortgages, predatory loan bankruptcies, a wave of foreclosures that flooded the market with cheap homes, and more homes for sale than buyers.

Today, these risky mortgages have been largely eliminated. Only the most qualified buyers - those least likely to be foreclosed upon - can get loans.

Rather than a housing glut, there is a severe shortage of properties for rent and sale, with many more buyers and renters than available homes. This keeps prices at a floor and prevents them from falling too far.

If we expect prices to plummet, supply will have to increase dramatically, and we simply haven't built enough housing for years.

During the COVID-19 pandemic, low interest rates helped drive historic increases in home prices. Because buyers were spending less on mortgage interest each month, they had more money to buy a home.

This spawned a real estate frenzy that led to frenzied bidding wars, with investors buying almost everything in sight, as well as six-figure offers over asking price.

Now that interest rates have risen, raising the monthly costs that today's new homeowners must share, buyers don't have as much money to spend on the actual house. Their money is going to lenders instead. As a result, prices have been forced down a bit.

Last October, the national median mortgage payment was $1,245.48 per month. A year later, buyers were paying about $1,000 more per month for the same property without including taxes or insurance costs.

However, home prices increased by only 13.3% year-over-year in October. So that means most of the extra cash they spent came from higher interest rates.

Over the 30-year term of the loan, buyers will pay $345,247.20 more than they did when they closed a year ago. Of course, this assumes they don't refinance the loan in the event that interest rates fall.