"I know a couple who bought a house for $3 million plus. Put about $800k down from their previous house which was mostly paid off, but that's still a huge freaking whack of new debt."

People who have apparently taken profits, but then simply used them to leverage up, are now in positions that are even more vulnerable to price drops. In the following example, a 25% pull-back in prices will wipe out 100% of the owners’ $800K equity. -vreaa

This from betamax at RE Talks 4 Feb 2010 12:10 am -

“I know a couple who bought a house for $3 million plus. Put about $800k down from their previous house which was mostly paid off, but that’s still a huge freaking whack of new debt. They thought they’d only be able to get a mortgage for $1 million based on earnings and were thrilled when the bank let them go into hock for more than twice that.”