In an excellent post yesterday, Bryan Robertson made a convincing argument in favor of higher downpayments as the way to improve lending standards. His conclusion was that Americans have to decide between putting their money into homes or other things. I agree with Bryan's conclusions, but I fear that the American Dream has evolved to the point where home ownership may no longer be a priority.
Many Americans have already made their decision between owning a home and having stuff, and it is evidenced by looking in their driveways. More important to Americans than their homes are/were the toys, most of them four or more years old now, that litter the garages and driveways of underwater homeowners. Now that there are no more double digit home "value" increases to feed the cash cow, we would think things are different. For many, nothing has changed. For example, how many first time buyers can barely qualify for a $700 monthly payment, while already making $1700 monthly payments on a couple cars? I think more than just a few.
While I do not feel that low down payments necessarily equate to automatic future foreclosures, home buying to many people is an afterthought, only an option if nothing on their monthly budget has to change. Maybe the prevailing sentiment in Washington is right. Maybe America is on the way to becoming a nation of renters. Maybe we have already arrived.
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