We did on anyone that put down less than 20%, but that was removed at some point to make it possible to make even bigger loans for people with incomes that could just barely pay the payments. We had zero-down, interest-only, negative-am loans being given without requiring insurance not too long ago (this is because nobody could afford these houses at all anymore, so they had to come up with creative mortgages. Basically, the prices were rising so fast that to someone at the lenders this seemed sensible because if someone flat sat on a house for five years from 2002-2007, provided projections continued, and sold it, they'd actually make money without paying a cent in principal...it spread to many more).
Bankruptcy was raped here, too, so they don't even have a safety net. While you can walk away, you can't declare and get left with the house like they used to do, unless you somehow fit the very strict requirements for the type of bankruptcy required. The only kind most can get now is a type that nobody in their same situation would have selected before the change in the laws.Up here in Canada, we have to pay a premium on the mortgage if we put less than 25% down. But also, mortgages aren't excused the same way in foreclosure - you don't get to walk away as easily as you do in the states. That'll be a significant difference as well.
Right now we're being propped by massive foreign holdings in countries that are growing. We print them paper, send it over there, and they hold it to give their currency value. Not too long ago, even your country was a major holder.Not that insurance will cover the market. It's just a transfer of risk - the end result will still be a dramatic shrinking of the money pool. I'm not sure how bad it will be, but it'll range between "minor recession" to "crash and burn baby". There is a slight chance of hyper inflation and such and a high probability of the US dollar losing another 10-20% of its value (from equity injection, lack of confidence and economic shrinking). In the worst case, these would come together and shatter the dollar further.
China has us by the proverbial testicles. If they squeeze, they can financially crush us (and for that matter, anyone holding our currency) just by releasing their lock with our currency, let alone if they dumped their holdings. The only reason they might not is the fact that they really can't recoup the losses in such a case without a military confrontation where they capture our land, because we don't have anything else to pay them with.But I'd rank the probability around 40% mild recession, 30% moderate, 15% strong, 10% dollar value drop >20%, and some combination of 5% crash and burn. The dollar bit isn't very likely because the US will impact on other currencies.
It's very random here. This area is looking at 60+% to return to sensibility, Vegas is at least 75% (Much of the property there was pure speculation, bought and sold sight-unseen by people that have never been there. Some friends live on a street in a subdivision that was built ultra-tight way out in the middle of nowhere likely mostly for "investors". They paid a demented amount for a house way out in the burbs, and both the houses next to them have never been occupied since they were built.)So real estate will drop in the states... I expect it to range from mild (5-20%) in smaller areas and those that didn't rise the same way to extreme (60-80%) in areas with rampant sub-prime speculation (Florida, Las Vegas).
I predict that where I lived will drop 40%. There are even some weird rural areas where there was a ramp for some inexplicable reason, like Bozeman, MT, that I know will drop massively to come in line with northern Wyoming (don't use Cody for reference - it is also hyper-inflated), which is so hyper-inflated that it's looking for a hard crash, too... Go surf zillow in MT and WY. While these prices may look okay to us on the coasts, these people make half to a quarter as much as we do. Is there any reason their housing is more expensive in relation to their incomes than ours? Wyoming is covered in 300-500+k houses in areas outside Jackson Hole...this is lunacy.
Last time I was up there I recall reading about the ramp-up there as well, but apparently they were somehow slightly suppressing it. Some of it may have been just the change in value between the currencies across the border, though.In Canada - Vancouver, I'm expecting the peak of the probability curve to be around 20%, with the still-possible peak ends around +5% to -45%. The market here is still very tight and clearly in the sellers area.