Boston Globe Predicts 20% Down on Home Purchases

Posted on April 11, 2011


Twenty percent down in buying a house may be the norm in the future, says an article in the Boston Globe.

“Seeking to avoid a repeat of the foreclosure crisis, the Obama administration and regulators have proposed rules that are all but certain to boost the interest rates and fees on many low-down-payment loans. Only borrowers putting down 20 percent could get the best deals.”

This, of course, would not prevent people from getting mortgages with little or no money down, it just would be more expensive. Has it occurred to anyone that rapidly rising home prices would make those fees worthwhile if people believed that they would make a great profit by selling in a year or two? If this rule change is meant to stop another bubble in real estate, it will fail.

Market bubbles have been happening for centuries. Another real estate bubble and crash happened in the Eighties. The experience did nothing to stop the next one.

Bubbles, it seems, are a part of human economic nature. No matter what little disincentives you add to the pot.

See full article here.