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Foreclosed conclusion
Washington Monthly, April, 2007 by Charles Peters
In another clue to the shaky nature of our current prosperity, consider that the typical down payment on a home, according to Kenneth Harney of the Washington Post, traditionally has been 20 percent or more. But now, according to a survey from the National Association of Realtors, from mid-2005 to mid-2006 "nearly half of all first-time buyers financed the entire transaction, obtaining mortgages in the full amount of the home price." And the median down payment for all first-time purchasers was just 2 percent.
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This means that as the value of the house declines, as it has in most areas in recent months, the home buyers owe more to the lender than they can sell the house for. With no savings to fall back on, what's going to happen when a job is lost or a serious illness strikes?
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