So you do need to have some assurance that your house is not going to lose value while you still owe a large amount of money on it.

You could just save up and pay cash, sure, but that's historically not a very good idea in financial terms. On a 30 year mortgage, you usually end up paying a total of about 1.5 times the selling price (including interest) if you carry it to term. Thing is, the house (normally) will also have gone up in value at that time through basic inflation and the magic of compound interest (while you're only paying simple interest on your mortgage), so you usually make a profit *and* you've had the benefit of living in the house all that time. You basically get the house "for free". This is not just in bubble times, this is true during normal real estate cycles too.

You also get some big tax benefits for owning a home, so you don't really pay 1.5 times the amount but more like 1.3 times. So that helps the bottom line too, and you come out even further ahead.

But if you instead just saved up all that money all that time, you'd get no tax benefit, you'd get no compound interest on the inflation of the value of the house, you'd at best get maybe a point or two of interest on a savings account or CD or t-bills or whatever. (You wouldn't want to invest your savings in the stock market, that's for sure.) *Plus* you'd have to pay rent in the meantime, which is just throwing money down the toilet and would more than erase that point or two of interest. So you'd come out way behind vs. just getting a mortgage and buying a house earlier.

You need to plan for the future. You can't just buy or not buy based on your financial condition right now. That's really short-sighted. It's not what any big financial decision is about.

So there does always need to be a question asked of what the market's likely going to do in the next 5-10 years vs. where it is now. People who aren't thinking that way get where they are - good or bad - through dumb luck.

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