I think you are looking at it in reverse a bit. When an economy is in a deflationary state, it is not good to borrow and buy things, because as soon as you do, your investment is worth LESS. Just as you mention, if one bought a truck for $25000 a few months ago, one would be very unhappy with its value now.  The same is true with real estate.  If you believe as you say we are in a deflationary time, it is time to sell, not buy. I don't believe long term deflation will be a problem as the government is pumping trillions of dollars into the system to head off such an issue. That is where your second point I feel is specious. Many people moved into dollars as the safe haven currency for the last several months due to the economic crisis. Now though, rates are more attractive in Europe and there has been a huge increase in the Euro denominated foreign reserve holdings of major central banks and away from dollars. If one looks at the dollar recently, it has been outperformed by the Euro, and more significantly the Yen. With money market yields approaching zero, many funds have stopped taking new deposits to maintain their yields.  This will also be a detriment to the dollar, as those funds will go elsewhere. Lastly, the budget deficit and national debt are approaching levels that may be unsustainable, meaning the dollar is likely to fall and inflation will eventually rear its ugly head yet again. This could be good for housing, as deflation may not last.

Right on Don, cash is king right now, too bad with an economy built on credit, few have the cash! lol