Welcome to the "Great Deflation"

We have heard alot of talk that we are in a recession or possibly a depression. If you read back in the history of this blog to February 2007 when I started speaking of the current economic crisis, the experts say no one could have foreseen how bad it was? Couldn't they? Can a Realtor Blogger from Albuquerque, New Mexico been the only one seeing it coming? I do not think so.

While housing in Albuquerque is still relatively stable it is suffering the effects of the over all US Economy, we are not immune, but home prices fell 4.8% last year after 3 years of record growth. Albuquerque as a whole has only fallen in two other years 2001 & 1982 so all in all not a bad record.

Why am I coining the term "The Great Deflation"? because typically in the past in order to combat inflation or deflation the Fed has manipulated the interest rate either higher or lower to increase or decrease the money supply. This time however with the interest rate at record lows, and the measure of CPI (consumer price index) we are seeing an over all drop in demand for consumer goods and services, with job losses, declining wages, declining home values and stock portfolios will only lead to further deflation as businesses lower their prices to get consumers back in them and spending again.

Is it a good time to buy an Albuquerque home? Absolutely, the biggest mistake consumers make is trying to buy at the absolute low in the stock or housing market. Consumers wait to long until the prices are back up in a frenzied pace like 2005 & 2006.

Is it a good time to sell an Albuquerque home? That depends on your individual neighborhood. If there are 3 or more recent REO's or Foreclosures on your block you might be better off staying put. If every other house on the block has a for sale sign on it you might have tough competition. But no matter what market we are in good or bad the old saying: Price, Conditon, Location match the buyer you will get your home sold."

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