[Porsche-O-Phile]

(hijack back on topic)

Good point Wayne - I wonder if the trend towards unwillingness to come up with high down payments is the inevitable consequence of the faster pace of society today or the simple rise in price (both as portion of disposable income and overall dollars), or both. Probably both.

Seems to me a case could be made that saving up for a "standard" down payment is actually a pretty lousy way to invest one's money. Let's say you save for 10 or so years, like we alluded to - you're getting (probably) some very poor rate of savings on that money, maybe 5% if you're lucky. The loss of earning potential off that money, particularly early in a young adult's life (when it could do the most for you long-term) offsets a lot of the potential return on investment later if the RE market appreciates (which it typically does, albeit a lot more slowly than we've seen lately). In a way, it probably creates pressure on the RE market to perform better to cover the extra "cost" (opportunity cost in this case).

Case in point - I'm basically saying "screw it, I don't want to live like a pauper for 10+ years to get a mediocre rate of return on an unpredictable housing market". Not at all uncommon. I can take the same money I'd "waste" saving up for that down payment, live a little more comfortably and put it into MUCH better performing funds (my Fidelity Emerging Markets fund comes to mind - 30%+ return last year. . .) I realize this is tied into the "impatience" that a lot of more traditionalist thinkers lament (and I actually tend to find myself leaning that way more often than I don't), but I just wonder whether it's "cause" or "effect".