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The Deflationary Crisis And Its Affect On The Housing Market

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Mad Money’s Jim Cramer of The Street.com is saying that the Federal Reserve is ignoring the current U.S. deflationary crisis and is trying to “reinvent” the economy by actually destroying it.Those are some pretty strong words but then again, Cramer has not been one to be shy about stating his opinions.

“If the government used home prices in the CPI reading, you’d see the biggest deflation since the ’30s”

Cramer predicts another 10% to 15% decline nationwide, and 40% to 50% peak to trough declines in bubble markets. He calls the Fed “reckless” and actually goes further and says that the Fed is a “radical right wing” organization.

What does this mean for those in the real estate business and for those in the market for a new home.

Well, that depends upon who you talk to. Real estate agents who primarily “list” homes and do little else are in for a tough time in the near future if Cramer’s predictions hold true. Accordingly so will the seller clientele of these so called “listing agents”.

If prices continue to trend downward as Cramer and other economists feel is likely, it will become increasing hard for listers to actually sell homes. If the market continues to decline as Cramer says and it drops an additional 20% or more, you are going to find sellers wiped out and in order for them to sell they may have to bring large sums of cash to the closing table. Read the story »