Against Aphobus

Deflation on the Ski Slopes?

User 330008,

This is not a criticism but a serious question: Given the expectation of inflation, is it a good idea to save up cash and wait for house prices to (hopefully) drop further? Wouldn't it be just as expedient to buy now and bank on inflation wiping out much of the mortgage price in a few years?

I just think that since the govt. loves using inflation to fix problems (while stealing our wealth), and since we are in a huge debt-related crisis, we can bet on them inflating it all away. Yes, income may lag for a while, but I think jumping on the inflation band wagon might be the better play for a 30yr investment.


On Jan 02 03:00 PM User 330008 wrote:

> Inflation will only affect home prices if incomes rise with the inflation.
> Over the past 8 years, wages have been stagnant in the face of inflation
> quarter after quarter. Now employers are freezing wages and cutting
> wages, let alone laying people off. This is largely deflationary
> and will affect home prices much greater than inflation. Secondly,
> once inflation begins to trump deflation, you can bet banks will
> raise their interest rates on mortgages; that will reduce the purchasing
> power of home buyers and bring prices down further.
>
> If you're considering buying property, don't. Rent in a comfortable
> home/location and save as much cash as possible. In 3 - 5 years
> when the HPI graph falls in line with its trendline since the 1950s
> or undershoots a bit (due to over capacity), then buy a house.