Part of the reason a normal middle class person can get a big loan to buy a house on relatively attractive terms is that there are government subsidies in place to promote just that. But a big part of the reason has to do with the nature of a house—namely that a house is a big old thing that lasts a long time and in a pinch if you don't pay back your loan the bank can take your house. During the high tide of belief in the magic of securitization and the myth of "nationwide housing prices never decline" that fact alone meant easy credit for everyone. But now that banks have been bitten they're twice shy and the role of the appraiser is once again important:
When Justin Olson put his Southwestern-style ranch house outside Phoenix on the market, he got what he was expecting: an immediate batch of offers, virtually all above his asking price, which was set intentionally low, at $197,500, to attract interest. He chose an offer of $210,000.
But then came an unpleasant surprise. An appraiser for the buyer’s bank said the house was worth only $195,000. That limited the amount that the bank would lend, forcing the buyer to come up with more cash or negotiate a lower price.
That's got to be a terrible feeling. From a seller's viewpoint, if someone's offering you $210,000 for your house then really that's all the proof you need that it's a $210,000 house. But this in part reflects the "winner's curse" phenomenon. If you auction an asset and everyone's pretty good at estimating its true value but still makes some mistakes, then the auction will be one by whoever accidentally most overvalues it. The upshot in a conservative lending environment is to require relatively large downpayments ("forcing the buyer to come up with more cash"). Over the long term, moving to a less leveraged economy has some big potential advantages but it's an impediment to these kind of transactions.
Ultimately, one solution would be to try to move away from the dominant role of owner-occupied housing in urban and suburban areas (the housing product is so nonstandard in rural areas that I think owner-occupied dominates for good reason). Instead of a bank employing an expert appraiser to calculate the "true" value of houses and then lend money to individuals to purchase them, you could imagine large landlording complanies employing appraisers to buy up houses and rent them out to individuals on long-term leases. Any given metro area might have a few big landlording entities that own the majority of the housing stock with owner-occupied housing a pursuit of an affluent minority that can make big downpayments. That's not how we've traditionally done things in the United States, but it seems like it could work.