Loose lending rules helped pump up the real estate market. When lending tightened the buyer pool shrunk. I think the squeeze is on the buyer with good but not excellent credit. There are still 3% FHA loans and the USDA rural loans are up to 102%. VA loans have a 2% funding fee that the buyer pays in financing costs. The 80-20 loans are almost extinct from what I am seeing (ask your mortgage broker). That’s when there was an 80% conventional loan and another 20%, often a maxed out equity line, to make up whatever cash to close the buyer needed.
Jumbo loans exist but at significantly higher interest rates than conforming loans (those under $417,500 for most markets). That’s hurt the sales of the $500k-$750k homes (numbers chosen somewhat arbitrarily) since most of the population isn’t sitting on wads of cash for a down payment. There were first time buyers in that range before, and there still are, but not as many. Those thinking about making a change by selling what they own and moving are weary of having to sell their existing homes. There are some houses that I’d love to buy if I was sitting on the cash to do so but since I’m not, I’ll be sitting on the sidelines as well.