Real Estate Values To Continue Falling
Another Sell Your Own Home PostNearly 1 out of every 4 Americans owns a mortgage that is greater than their homes value. Well, with the way things are looking, it looks as if things will get worse before they ever get better. Here are four reasons why we will likely see home prices drop over the next few years.
The Number of Homes for Sale is Too High. – This is the most basic element learned in Econ 101. When there are more homes for sale than there are buyers, home prices drop. With inventory too high, the only homes that sell are the least expensive properties. This leads to a drop in real estate values.
Foreclosures Numbers Don’t Appear to Be Going Down Any Time Soon. – Foreclosures drive home values down two ways. The first way foreclosure homes lower home values is by adding to the already too high real estate inventory levels. The fact that most foreclosures aren’t taken care of contributes to the overall effect of lowering values of homes in its neighborhood. Homes that sell now, will become the comparables used for appriasal pricing for future sales. When all the homes that sell have low prices, comparable properties must also have low prices for the lender to approve financing.
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 larger than they were in the past, the numbers are still high compared to the historic averages.
Remember, real estate is regional and every real estate market is different. Homes for Sale in Naperville might not drop in value at all. Homes for Sale in Newton MA might see double digit price declines. It’s possible that Canton GA Real Estate will see real estate prices remain completely stable. There is really know way to know for sure, but overall we will see additional declines in US Real Estate values.
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