Joe_in_Campbell

Deflation on the Ski Slopes?

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.