We all could be wrong, but if you are betting on a 30% drop over 5 years you should try to find something besides home ownership as a goal.
Regarding the 100% financing, the key is the 1M loan amount, anything above that is not deductible, and AMT will catch any attempt to do so with a second. A lot of people with money in excess of what they need to buy the house only put enough down to get to the 1M threshold. This provides a deduction, and the other cash can be used for other investments as insurance against a real estate drop.
The comments on this thread about areas like stonebridge are right on the mark (stay away). If purchasing above 1M you need to look at the existing demographic of the neighborhood. If everyone is heavily leveraged and low on other cash as the posts indicate, bad things lie ahead for pricing. On the other hand, if the neighborhood consists of business owners and professionals that put 20% plus down and have additional cash to spare, the overall pricing in the neighborhood should be better (no forced sales, adjustments out of income, etc).
