[Oatka]

Which would only be a problem if they had a reason to sell soon... otherwise, it makes ZERO difference.

Normally that would be true, but in this economy, whether you put down 1% or 20%, once you lose your job, you are immediately "underwater". Those who bought only as a home to live in, overpriced or not, and are in this position have my deepest sympathy. Sadly, the situation is not going to improve. I said it before, but it is wort repeating, the 1930s are going to be looked upon as the Golden Years.

[LearsFool]

Normally that would be true, but in this economy, whether you put down 1% or 20%, once you lose your job, you are immediately "underwater".

Well of course, but now you're bringing in another factor altogether - one which causes difficulties for people in good housing markets as well as bad. We can bring in other such factors if you like, but they would likewise have no bearing on whether someone is willing to buy your home for what you paid for it.