I think that given the sky-high prices in California, most buyers are in the Alt-A or subprime segments.

I believe that 100% financing is here to stay. Some lenders will take the risk for the right interest rate or up-front closing costs (whether paid by buyer or seller).

The mortgage business will become like the auto and credit card businesses where everyone can get financed. Do you remember when you needed a down-payment to buy a car, and leasing was only for business executives? Now everyone goes for the low payments.

Only the best credit risk customers will bet the best rates. Everyone else will pay more to defray the losses. So long as buyers only focus on monthly payments, then there’ll always be products to serve that segment. I believe that Interest-Only is how most people will buy houses in the future (interest-only and make principal payment whenever you’re in the mood). That’s the best scenario for the REIC so they can move more houses, and also the best scenario for the lenders because they can increase fees and transaction churn thus creating more profits.