[ryandamm]

For a lot of these transactions, the mortgage isn't for the full price of the home. Partially because buyers have other assets (like stock, or cash that needs to be parked somewhere).

But also because the mortgage interest deduction tops out just shy of $1m, I believe. So the government-sponsored giveaway (being able to use pre-tax income to pay for your mortgage interest) tails off quickly, and the rational calculus around loan-to-value shifts dramatically.