I’m not so sure. Here’s the one thing that’s bugging me — money seems to be worth less every year. If you think that that trend will continue, then borrowing a bunch of money now might actually make some sense. Now you don’t want to overpay of course, but assuming that prices have come down 20% or so from the top, maybe you get in now at low interest rates and then in 10-15 years money is worth a lot less and your loan is looking like a bargain then?
Just guessing. But probably for most buyers they’re not thinking that far ahead, just “I want a house, here’s one I can make the payments on, I’ll take it.”