Federal Reserve Chairman Ben Bernanke recently estimated that about 45% of foreclosures in 2007 were on private, near-prime or government-backed mortgages. And that means plenty of people who thought they were fine are facing catastrophe, never expecting that their homes would be worth less than the purchase price.
The median first-time buyer put down less than 2% to buy a house in 2007, according to the National Association of Realtors. Many put down nothing, even borrowing to cover closing costs.
Keep in mind that's 2007. The subprime industry collapse happened in February and March of 2007. The first major moment of "credit crunch" happened in August of 2007. And still, in 2007, the median downpayment on a house was under 2%, which tells us that 50% of borrowers basically had no money down.
Wow.
So if you're curious to know if housing prices are done falling, or if the financial crisis is over, the answer is, uh, no.
...adding, on second read I realize I missed the phrase "first-time buyer," so it isn't quite as bad. But still bad.