Hundreds of Thousands of US Citizens have are disturbed by the fact that they owe more on their mortgage than their property is actually worth. In light of the most recent economic news, it looks like the economy will depress further before it improves. Here are major reason why real estate values will continue to drop.
The Number of Homes for Sale is Too High. – This is basic economics. Anytime there is more inventory than demand, prices go down. With inventory continuing to rise, only the least expensive homes are selling. This causes a drop in the overall value of real estate.
Foreclosures Numbers Don’t Appear to Be Going Down Any Time Soon. – Foreclosures are detrimental to home values in two different ways. First, foreclosure homes lead to lower values by adding additional suppy to the already oversupplied housing market. The fact that most foreclosures aren’t taken care of contributes to the overall effect of lowering values of homes in its neighborhood. With the way appraisal standards are, sold homes become the comparables that will be used in determining the value of future home sells. As sales prices go down, the comparables used are less, making it harder for homes to appraise at the purchase contract price.
The Economey Must Get Better. – There are still too many American’s who don’t have jobs, or are under employed. Most American’s rely on jobs to provide the money to make house payments. Being that most people finance real estate purchases with mortgages, jobs are also needed to qualify for home loans.
National Home Prices Currently Much Higher Than They Have Been in The Past. – The Case Schiller index shows that today’s home prices, adjusted for inflation, are still about 30% higher than historic norms. While houses today are bigger than they were in the past, the numbers are still high compared to the historic averages.
Every real estate market is different. It’s possible that Naperville IL Homes might actually see price increases. Tremonton Utah Real Estate might see double digit price declines. Prices of Homes for Sale in Baltimore MD might remain completely stable over the next few years. We don’t know what will actually happen, or how bad things will be, but overall the numbers indicate further declines in home values.
