For a number of personal reasons we’ve been paying more attention to real estate markets lately. If you want a simple contributor to the problems in the housing market and the large number of foreclosures, maybe you need to look no further than the trend toward low down payments in the housing market. We never put less than 10% down, and really like that magic 20% number which would make private mortgage insurance go away and would make lenders not require escrow accounts. The rationale has always been that the more equity a borrower has, the more likely they are to take care of the property and to keep it out of foreclosure and default. Look at this chart, and see if it helps explain the housing bubble and the problems in the housing market these days.
More about this can be found here.