When above average income people can't afford to buy a home it has become a bubble.  Interest rates rising will cause a last surge as people jump in for fear of missing out.  However, when you eliminate almost every first time buyer the market will blow up.  This artice is exactly what I was seeing in Florida in 2007 and then housing prices collapsed by up to 50% and there were foreclorsures were everywhere.  And the mortgage insurance will not save anyone in an avalanche.