My beef is that easy credit isn't just driving up the price of housing it's driving up the size of housing which is connected to the price.
My beef is 3 fold: NIMBY, weak public transport, REITs buying SFHs and small multis that historically have always been owner occupied.
I am a bit puzzled by where this down money would come from. Given college debt payments and stagnant wages. Also, saving money is not a practiced virtue in the US :-)
Part of the reason housing prices went up so much in the last 20 years is falling interest rates, but another is the reduction in down payment.
Here is an article from 1990 that talks about conventional loans being 20% down: http://articles.latimes.com/1990-05-13/realestate/re-252_1_v...
It would be similar if government backed college loans suddenly vanished. The first year colleges would have very few students enroll and they'd have to figure out how to slash tuition by 50-90% (depending on how expensive they are) and the next year when people could afford to attend without spending buying-a-house amounts of money enrollment would get back towards normal.
It's not that 20% down would directly make housing more affordable, in the short run you're absolutely right that it would make it far more unaffordable.
But in the long run, as the parent said, it would ground the market in rational valuations instead of crazy ones.
Leave it at 20% heck raise it to 50% as long as you can have affordable housing.
If your first housing will cost 5 years of the median wage no one will have issues buying it, when a house costs 20 years, in which you need to pay rent, feed yourself, get married and have kids no one will every get into the market unless they get help form their parents or strike gold.
But hey fuck us flyover states-- what with our high paying jobs and affordable housing
Just kidding, I'm in flyover country as well (Colorado), though our real estate is much less affordable than yours, it sounds like.
The issue is she works from home and someone tied to a corporate office in SF might not have the luxury of moving out east.
Real-estate is already dirt-cheap up there - a home that would sell for half a million in Boston or a million in SFO can be bought for less than 150k. It's going to crater even harder.
If anybody likes to ski and can work remotely, I've got a couple of houses for < $100,000 in the family that are a half-hour from Sugarloaf or Sunday River...
It's doable, but with a lead dev salary in NE Ohio. This is neither common nor really acceptable, but I worked hard to save my money.
My wife only makes around $20k/year, maybe less, so this is almost entirely coming out of my pocket.
If you have just been given a job offer to come work in the bay area you are likely looking for a home to move your family. Your signing bonus isn't going to be given as a lump sum, so you are stuck renting for $4,000/month. Not to mention that previously $500k starter home is now $800k (still a bad neighborhood with crap schools too)
I'm a software engineer and my wife is a nurse. We supposedly fit the demographic that's pricing people out of the area, but more and more we feel priced out ourselves.
I've been sitting on a 20% deposit for years (at the equiv of SF property), but simply cannot afford to buy given all those costs.
The only way I can see it happening is to be married, with a double income.
I've been told by several people that it is significantly harder to get a mortgage today than in 2007/2008.
Perhaps he was making it harder than it really is but a mortgage is the hardest consumer credit to get.
Getting a mortgage is not terribly difficult. Both child support and unemployment income can be used to obtain a mortgage. It really depends who is going to buy the loan. If its Fannie or Freddie (government sponsored entities), you have to meet their criteria if they're to buy the loan from you after you've made it. If you're a lending institution who is going to hold and service the loan (local banks or credit unions) you have a lot more leeway in what your criteria is.
But it's still easy enough to move the market. Cheap credit no one can get isn't going to have an impact.
When 2.5x median income doesn't buy the median house (or even close) there may be an issue. There isn't anything magical about the 2.5x number though, but IMO there is an upper limit on what is reasonable for people to spend on housing.