80/20 Rule

In technology projects we often refer to the 80/20 rule. This refers to the fact that in most projects, the last 20% of the project takes 80% of the time. The 80/20 rule will become more prevalent as the credit crunch continues to deteriorate. Lenders will be requiring 20% downpayments to finance 80% of the value of the home. This will continue to drive home prices down. The real ratio will be 3 to 1. Home prices need to get to 3 times income across the board before they start to plateau. In case you haven't noticed, the recent bubble is built upon ratios closer to 6, 8 or 10 to 1 times income. That is unsustainable as the lenders are quickly finding out. Deleveraging is a bitch. Deflation is a bitch. This bitch is here for a long time to come.