“At 100K, you can easily support the mortgage on a 350K house. I don’t see the decline going beyond 30% from today, and I think 20% is more likely.”
In 2002, we were first time buyers of a 320k home, and we were making around the median. It wasn’t easy to support the mortgage even thought we had a small amount of debt. The only reason we jumped on the bus was because the rates were low and it seemed like we just had to get on board.
What if rates don’t come down as much…will it not force the prices down even further. In 2-3 years, my bet is that the average joe will look at home ownership as a risky proposition…in 2002 the opposite was true.
So if you are talking about fundamentals, I would say that negative sentiment and higher rates would make a 350k home much more difficult of a purchase for someone making 100k.