[bko]

How do you figure? Homes would go down in price, but your mortgage would stay the same. It's kind of like how people finance cars, even though the value of their car is going down while they're paying down the price of a brand new car.

[dragonwriter]

> How do you figure?

Assuming amortization with fixed nominal payments, the real (adjusted for CPI) price if the payments goes up over time with deflation, because the buying power sacrificed to the payments increases.

[whimsicalism]

In a deflationary environment, the real amount oustanding on your mortgage goes up.

[jbay808]

Perhaps, but likewise the home itself is likely to be much cheaper and so a smaller loan is needed, if any.

[whimsicalism]

You can't just get a smaller loan every year.