Are Home Prices Dropping?

Are Home Prices Dropping?

The housing market has fluctuated over the last decade. Prices of homes have increased and decreased due to the economic issues that have occurred over the years.

The biggest decrease in home prices had plunged to an all-time low in 2008. This might sound like a great time to purchase a home and in certain situations it is.

But why are home prices dropping? Many reasons are linked to this decline which hurts the overall value of home owners.

When the real estate prices fall; the value of the home decreases as well. Potential home buyers are curious if buying a home will be cheaper in the upcoming months.

Understanding the Housing Market

In order to determine if there is a future drop in the housing market; it is important to understand what that means. Within the last decade, the dramatic drop in the housing market was partially caused by increased foreclosures.

When a foreclosure occurs, it means that the homeowner cannot afford to pay for their home and the bank has to take ownership of the property.

A dramatically increased rate of foreclosures will cause the housing market to drop in price. The supply of housing is plentiful and will decrease in price. This allows the bank to sell the houses cheaper than keeping them.

When a bank sells the house they are making money off of the buyer. A bank who has taken ownership of an abundance of homes will not make money unless they sell the property.

In order to get rid of the homes they have repossessed during foreclosure; it is likely the bank will decrease the price to make a sale of the property.

In the last four years, a number of bank foreclosures have lowered in the housing market. This caused a rise in housing price.

Another factor that determines the prices to drop is the decrease in interest rates. When interest rates decrease it allows for home buyers receive a financial gain for home mortgages.

Interest rates that are less expensive can help the increase of housing purchases. The prices will be more affordable and it causes a higher demand within the real-estate sector.

Increase in rent that individuals pay each month can also have an impact on the housing market. The more money individuals have to spend for rent will increase the probability of them finding a home to purchase.

A decrease financial rate that homes are on the market for, can be influenced by employment. Jobs that are lost or moved overseas will put more people out of work.

The lack of finances can hurt the housing market and reduce the price of purchase. The fewer homes that are being bought will encourage prices to be lowered for a potential sale.

The market’s inflation and economic health have a big impact on the housing prices and the affordability of the purchases.


With these reasons in mind, it can now be determined whether the housing economy will decrease in price within the near future. According to each of these factors; the housing market had increased slightly in 2015.

In 2016 housing prices are expected to fall slightly. This is due to the economic stability and the financial homeowner loan markets.

People who are thinking of purchasing a home may find slightly cheaper prices this year than last year.

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