Leverage is a key concept in real estate-buying a lot with a little, but among recent home buyers it has reached extraordinary levels. New survey research using a representative sample of purchasers found that at least among first-time buyers, downpayments have withered to the point of virtually disappearing.

The National Association of Realtors polled 7,548 consumers who bought homes between mid-2005 and mid-2006. Forty-five percent of first-time buyers financed 100 percent of the transaction-they made no downpayments whatsoever. Another 20 percent put down 5 percent or less and 30 percent invested 10 percent or less.

Among first-time purchasers in the South, the median downpayment was zero. In the West it was 1 percent, the Midwest 2 percent and in the Northeast, 4 percent. Among repeat purchasers, the median downpayment in the South was 13 percent, in the Midwest 15 percent, the West 18 percent, and in the Northeast, 22 percent.

The reason for the high leverage, according to researchers, is that home prices in many areas during the boom years soared far beyond consumers' income growth and other financial resources. The only way many buyers could afford a new house was to take out a big loan with a minimal downpayment.

Also contributing to the minimum-down trend: Innovations in the mortgage market that allow small or zero downpayment programs for qualified buyers, including popular "piggyback" plans that combine first and second liens up to 100 percent.

The financing research is part of NAR's 2006 "Profile of Home Buyers and Sellers." Other notable findings from the study:

• More than one of five first-time buyers received help with their downpayments-minimal though they were-from relatives or friends. Seventy-three percent tapped into their savings accounts to put together the cash, and 4 percent took money from their IRAs.

• Fifty-two percent of all buyers view their home as a better investment than stocks, and another 29 percent say a home is about as good an investment as stocks.

• The demographics of home buyers are shifting rapidly. In 1995, 70 percent of all purchasers were married couples. In 2006, just 61 percent were married. In 1995, 14 percent of buyers were single females. In 2006, they represented 22 percent of the market. Single males, by comparison, were just 6 percent of the market in 1995 and in 2006.

• Foreign-born buyers are becoming an increasingly important component of the housing market. In the Northeast, more than one of every seven purchasers (15 percent) were foreign-born in 2006. In the West, 13 percent were foreign born, 10 percent in the South and 6 percent in the Midwest.

• First-time buyers decreased as a percentage of the total market in 2006, falling to a 36 percent share. That is down from 40 percent in 2005, and is the lowest share since 1995, when first-timers accounted for 42 percent of all sales.

Published: February 12, 2007

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.