Effect of country default on house prices?
It could be a a way to preserve the value of your money, but depends upon various factors. If a country defaults, and it leads to hyper-inflation, by definition that means that money loses its purchasing power.  In even simpler terms, it cannot buy as much tomorrow as I could today. Therefore people can be incented to either hoard physical goods, or other non-perishable items. Real-estate may well be such an item.  If you are resident in the country, you have to live somewhere.  It is possible that a landlord might try to raise rent beyond what your job is willing to pay.  Of course, in a house, you might have a similar situation with utilities like electricity... Assuming some kind of re-stabilization of the economy and currency, even with several more zeros on the end, it is conceivable that the house would subsequently sell for an appropriately inflation adjusted amount, as other in-demand physical goods may. Lots of variables. Good Luck. Some of the factors that will act on house prices are: There will likely be a recession in that country, which will lower incomes and probably lower housing prices. It will likely be harder to get credit in that country so that too will increase demand and depress demand for housing (cf the USA in 2010.) If Greece leaves the Euro, that will possibly depress future economic growth, through decreased trade and investment, and possibly decreased transfer payments. Eventually the budget will need to come back into balanced which also is likely to push down house prices. In some European countries (most famously Spain) there's been a lot of speculative building which is likely to hang over the market. Both countries have governance and mandate problems, and who knows how long or how much turmoil it will take to sort that out. Some of these factors may already be priced in, and perhaps prices are already near what will turn out to be the low. In the Euro zone you have the nearly unprecedented situation of the countries being very strongly tied into another currency, so the typical exchange-rate movements that played out in Argentina cannot act here.  A lot will depend on whether the countries are bailed out, or leave the Euro (and if so how), etc.  Typically inflation has been a knock-on effect of the exchange rate moves so it's hard to see if that will happen in Greece. Looking back from 2031, buying in southern Europe in 2011 may turn out to be a good investment.  But I don't think you could reasonably call it a safe defensive investment.
"The public doesn't really need to ""notice"" for inflation to take effect.  Inflation happens there's more money relative to things to buy.  Most people think that if say we increase the money supply by 2x, everything should get more expensive.  But it matters ""where"" the increase in money supply is and to ""whom"" is receiving it.   For example, the liquid money supply for US$ increased almost 4 times from 2009 to 2017 via quantitative easing, where the central bank purchased not just short term treasuries, but also longer term bonds.    You would think that having 4x the amount of US$ circulating would lead to a lot of inflation on consumer prices.  For every $1 that was floating around in 2009, we now have $4, so people should be willing to pay more for a given good, increasing its price.   However, the ""new"" money has been primarily used to purchase assets, and drive up their prices.  It has not really found its way to into worker pay (or to the general public), as median income for workers has stayed relatively flat in that time frame.   So it can be argued that the ""asset"" markets are feeling the effects of ""inflation"" from the increased money supply.  Where real estate prices, public stock prices, venture capital investments, etc. have all seen a large increase in their costs to acquire relative to the same asset and opportunity.   These assets are acting like a ""sponge"" for the ""new money"" that prevents the effects of its inflationary properties from exiting out into the consumer economy.   That is also why central banks across the globe are in a predicament in how to ""stop"" quantitative easing.  If they were to shrink the money supply, the inflationary pressures on assets would go down because there's not enough new money to keep raising their prices.  Doing it the wrong way would cause housing, stocks, and investment markets to stop growing, because there wouldn't be as much ""new money"" creating demand for those assets.   The best way I can illustrate this is with an example:  Say you have an economy that consists of an ""Orange Tree"" that produces 10 oranges per year.  There are 10 people in this economy that each want 1 orange per year.  And there is a circulating money supply of $10.   The owner of the Orange Tree hires all 10 people to pick 1 orange for him, and pays them $1 to pick.   In this scenario, each person picks 1 orange and gives it to the owner.  They then receive $1.  They then turn around and purchase one of the oranges from the owner of the tree.  Because demand is 10 oranges, and supply is 10 oranges, and the money supply is $10, each orange is priced at $1 and everyone is happy.   Now let's say the central bank ""prints"" $100 more dollars.  If the central bank gave it to the ""people"" evenly, each person would end up with $11.  Now we have 10 people that want 10 oranges and each have $11.  So, the price for the oranges would ""inflate"" to $11 per orange.   Now let's say instead of giving the extra $100 to the ""people,"" the central bank instead gives it to the ""orange tree owner.""  The owner can still pick his 10 oranges with the 10 people (the labor force), and can still charge $1 per orange.  As long as oranges are still $1, he doesn't really need to increase the ""wages"" of the orange pickers.  So, instead, he invests the $50 into building a bigger house for himself, and then puts the remaining $50 into developing an ""orange picking machine.""  The supply of oranges is the same, the demand for oranges is the same, and the supply of money that demands oranges is the same, so each orange will continue to be priced at $1.  In this scenario, the supply of money increased by 10x, but the prices of oranges did not inflate.  This is because the new money went into assets, not consumer demand.   Now play this scenario forward a few years.  The orange tree owner now has a machine that picks oranges, so he stops hiring people to pick oranges.  Now he has a new house and all the oranges he can eat.    Now let's say this economy was replicated 100 times, but here are only 20 houses.  So there are 100 ""orange tree owners"" and 1,000 people that get paid to pick oranges and are willing to pay to consume oranges.   The central bank hands $100 to each of the 100 orange tree owners.  In this case, some of the Orange Tree owners will bid up the price of the houses from $50 to $100.  The other Orange Tree Owners may invest in bigger and better ""Orange Tree Picking"" machines.  That automation will lower the cost to pick oranges, and increase profits if prices stay the same.  Eventually, those owners will be able to bid more than $100 for one of the 20 houses.   As this plays out, the price of a house will continue to increase until all orange picking is automated, but no one can afford oranges because they are not needed to pick them anymore.   This is a simplified version of what's basically happening on a global scale." What you are suggesting will not work. Banks have strict guidelines about what they can and cannot do with an FHA loan property. Remember the FHA is only an insurance policy to the bank saying that if you default they will cover a high percentage of the loan.  The bank won't take the risk of violating their insurance policy and the government refusing to pay them off if you default. Instead, consider doing a creative sale on your property, maybe a rent to own deal or owner financing. As long as you pay the mortgage the bank won't even know you don't live there and you can rent the house out to someone who eventually will buy it after the timeframe expires. Meanwhile you can go and get a new home or condo either thru regular financing or owner financing(search the internet to see how to do this) and you can use owner financing until you complete the sale of the first house. Otherwise just tough it out in the house you are in until the time expires and then sell. You made no mention of the property value but I am assuming if you bought it 3 years ago that you may have a little equity. Pleas note that if you sell at that time though you will likely have to come out of cash because your equity won't cover the realtor fee and closing cost. But if you do the rent to own I suggested earlier you can sell at a slightly higher price making sure you can cover those cost. I realize this answer is a little out the box but I deal with people who don't want properties all day and I have completed transactions like this many times. Good Luck and God Bless! Banks make far more money on bad ~~creditors~~ debtors.  The interest rates and penalties for getting behind on payments are pretty absurd.  There was a law passed in 2005 that made it extremely difficult for people to continue to file for personal bankruptcy, so the banks thought they were safe.  This could've been extremely lucrative for them had there not been an snowball effect of the rates doubling thus forcing many to search for last resorts plus the fact that so many houses were now underwater due to dropping housing prices at the same time.  If they default then the bank just keeps the house... win for the bank unless the housing market sucks so they can't unload it and they have to take a huge lose even if they could. "The setting of interest rates (or ""repurchase rates"") varies from country to country, as well as with the independence of the central bank. There are a number of measurements and indices that central bankers can take into account: This is a limited overview but should give an indication of just how complex tracking inflation is, let alone attempting to control it.  House prices are in the mix but which house or which price? The choice of what to measure faces the difficulty of attempting to find a symmetrical basket which really affects the majority regularly (and not everyone is buying several new houses a year so the majority are ring-fenced from fluctuations in prices at the capital end, but not from the interest-rate end). And this is only when the various agencies (Statistics, Central Bank, Labour, etc.) are independent.  In countries like Venezuela or Argentina, government has taken over release of such data and it is frequently at odds with individual experience. Links for the US: And, for Australia:" Interest rates do generally affect house prices but other factors do too, especially the unemployment rate. However, everything else being equal, when interest rates drop, it makes the borrowing of money cheaper so tends to stimulate the economy and the housing market, increasing the demand for houses and generally causes house prices to increase (especially if the supply of new housing doesn't increase with the demand). When interest rates go up the opposite happens. Usually interest rates go down in order to stimulate  a slowing economy and interest rates go up to slow down an overheated economy. Regarding your situation you are able to get a 30 year fixed rate at today’s interest rates (in Australia the longest fixed rate you can get is for 10 years and the rate is usually 1 or 2 percent higher than the standard variable rate. Most people here go for the variable rate or a fixed rate of between 1 to 3 years). This means that even if rates do go up in the future you won't be paying a higher rate, which is a positive for you. You are buying the house to live in so as long as you can keep making the repayments you should not be too worried if the price of the house drops sometime in the future, because if your house has dropped and you want to sell to buy another house to live in, then that house would have also dropped relative to yours (give or take). So your main worry is that rates will go up causing both house prices to fall and unemployment to rise, and you yourself losing your job and eventually your house. It is a risk, but what you need to consider is if you can manage that risk. Firstly, I believe rates won't be going up in the US for a number of years, and if and when they do start going up they will most probably start going up slowly. So you have some time on your side. Secondly, what can you do between now and when interest rates do start going up in a few years: Try to put more saving away to increase your safety net from 6 months to 12 months or more, or make extra repayments into your home loan so that you are ahead if things do go wrong. If you are worried that you could lose your job, what can you do to reduce your chances of losing your job or increasing your chances of getting a new job quickly if you do lose it? Improve your current skills, get new skills, become an invaluable employee, or look at possible opportunities to start your own business. Do your own research on the types of houses you are looking at buying, the more houses you look at the better prepared you will be when the right house at the right price comes along, and the less chance that you will be rushed into buying what might be an overpriced house. So to sum it up; do as much research as you can, have an understanding of what your risks are and how you are going to manage those risks. "The long and short of it is, the mortgage company has a significant interest in the resale value of the home in the event of a default.  Imagine a scenario where you say to yourselves that you're not going to repair the deck just yet (""meh, we'll do that next summer"") and something happens that causes a default on the mortgage. The resale value of the home may be harmed by the deck, even though you're willing to live with it.  That being the case, the mortgage company has every right to insist that you carry out the repairs in order to maintain the property in salable condition, so the essence of it is, you don't have much choice but to do the repairs. Keep in mind too that the insurance company paid for the roof and the deck to be repaired.  If they were to learn that you now have no intention of using the money to repair the property, you could end up in legal hot water with them.  After all, you did accept the check for repairs that you're now not carrying out." "But do you know about a US state risking to go default now or in the past? Ultimately, a US state could go into default.  However, I doubt that such a scenario would be allowed to transpire. This seems to happen to California with some regularity.  That is, risking default.  What would happen is not quite well known: ""There is no provision for a state to go bankrupt,"" Kyser said. ""I don't think anyone really knows what will happen or even if the state will go into receivership if it does default. I can tell you this, officials are looking at all the (current) laws."" (source) I believe that the answer to your question is that it could happen, but likely would not be allowed to occur.  The nature of the EU and US are quite different.  The individual states forming the US are not separate nations.  For better or for worse, the US is a stronger federation than the EU. (Something that is lamented at times when the Feds mess with the purview of the locals.)" "As Michael McGowan says, just because gold has gone up lots recently does not mean it will continue to go up by the same amount. This plot:  shows that if your father had bought $20,000 in gold 30 years ago, then 10 years ago he would have slightly less than $20,000 to show for it. Compare that with the bubble in real estate in the US:  Update: I was curious about JoeTaxpayer's question: how do US house prices track against US taxpayer's ability to borrow?  To try to answer this, I used the house price data from here, the 30 year fixed mortgages here and the US salary information from here. To calculate the ""ability to borrow"" I took the US hourly salary information, multiplied by 2000/12 to get a monthly salary. I (completely arbitrarily) assumed that 25 per cent of the monthly salary would be used on mortgage payments.  I then used Excel's ""PV"" (Present Value) function to calculate the present value of the thirty year fixed rate mortgage. The resulting graph is below.  The correlation coefficient between the two plots is 0.93.  There are so many caveats on what I've done in ~15 minutes, I don't want to list them... but it certainly ""gives one furiously to think"" !! Update 2:  OK, so even just salary information correlates very well with the house price increases.  And looking at the differences, we can see that perhaps there was a spike or bubble in house prices over and above what might be expected from salary-only or ability-to-borrow."