The highest interest rate that I've ever paid on a mortgage was 12% (that was at the place before this one - sometime in the 1990s). Do the math with today's prices based on that sort of interest rate. Ouch. I think a lot of people in today's housing market have never seen what it's like when rates are high. My parents paid off their house just before rates skyrocketed (reaching around 20% if I remember right) in the early 1980s.
I don't foresee interest rates going that high in the foreseeable future, but then, no one foresaw interest rates going as low as what we've seen lately, and it's hard to see it going any direction but up. I doubt if it will be much (it would be a disaster) but it's hard for rates to go much further down, and that downward direction of interest rates is what has allowed people to afford the payments on these properties. If/when interest rates go up ... look out.
+1
I paid off my mortgage as rates were already declining in the late 90s. At the time, I remember thinking that 8% non-tax-deductible interest needed to get off the books as quickly as possible. I can't imagine 20%...