They put 10 percent down and took out a 90 percent mortgage. Several years later, they were transferred to Washington. Home prices in Oakland had dropped about 20 percent and the real estate market was soft, so the home didn't sell quickly. When it did sell, the sellers lost their down payment money and more. They had to liquidate savings in order to pay the difference between their remaining mortgage balance and the sale price.
Home prices move up and down like stock prices.
But, unlike stock prices, the equity in your home is not liquid. If the real estate market is in the doldrums when you need to sell, you may have difficulty selling. To protect yourself against fluctuations in the real estate market, don't buy unless you plan to keep the property for five to ten years. John and Rachel are worried about buying now because home prices are high. John and Rachel probably shouldn't buy if they have any concerns about their job insecurity or if a transfer is eminent.