20% down would mean even fewer millennials would be able to buy a house. I don't know anyone that has 40k sitting around in their bank accounts for a 20% down payment on 200k starter home.
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.
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...
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.
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.