6 Reasons Why Housing Market Prices Fall 

Stock markets are where people understand the risks involved and accept price falls from time to time. On the contrary, the housing market is different.

Not many people who buy houses are financially prepared for the fact that housing market prices do fall from time to time.

Historically, the housing market has not been affected much by price variations compared to other popular assets people own.

This phenomenon could be mainly due to the nature of the transaction – enormous costs with purchasing a home, holding, and maintenance costs.

Increase In Interest Rates

Interest rates are critical to the housing market since when interest rates increase, there will be an increase in consumers’ total monthly mortgage payments.

So basically, a rise in interest rates makes mortgage payments difficult for homeowners, and this will eventually decrease the demand for houses leading to prices falling.

Economic Recession

Recessions can lead to an increase in unemployment and lower household income. In recessionary environments, home buyers and real investor investors tend to be defensive, lacking the certainty required for a significant investment like a house purchase. The lack of confidence reduces the demand in the housing market.

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