Over the past few years I've been quite puzzled over who could actually be paying typical prices in some housing markets. Who could afford them? We know now that part of the answer to that question is that plenty of people were buying houses they couldn't afford, over the long run at least, because they were getting loans with ridiculous terms.
A second group were people who were trading in a previous home in which they'd built up some equity.
A third group were people who got some sort of economic windfall - an inheritance for example - that allowed them to buy.
A fourth group were those people who actually had the household income to cover a $2500-$3000/month mortgage.
Groups one and two are drying up. I'm not sure how many people there really are in groups three and four.
