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Why Falling House Sale Prices
Affects Housing Affordability
For years people have become used to rising house prices, and it is only
when market conditions change, many realize 'what goes up ... can come
down.'
A number of factors can affect the price of housing: the local economy, the
national and global economy, mortgage interest rates, taxes, income levels,
employment levels, business growth, consumer confidence and inflationary
pressures etc.
A Fall In Consumer Confidence
A fall in house selling prices can trigger a fall in consumer confidence. People
become more risk averse. This is because, most homeowners view falling
house prices, as a serious problem. A fall in consumer confidence can trigger
a fall in consumer spending.
Income Levels And Housing Affordability
The incomes of potential buyers affect how much house prices can increase.
Income levels need to keep pace with housing prices. If they don't, the dream
of owning your own home becomes unaffordable for many. This in turn can
affect the demand for housing, because people ask themselves 'what price of
house can I afford?).
Housing affordability varies from State to State and Country to Country and, is
generally measured by the ratio of home values to income levels. For
example, home values could be 2 to 4 times income levels. When this ratio
changes and house prices out pace incomes, housing becomes increasingly
unaffordable for many.
Housing affordability improves when house sale prices fall and/or incomes
increase altering the ratio.
Mortgage Commitments
Most homes are purchased with a mortgage, so the homeowner must have the
ability to make regular payments. Housing becomes unaffordable when; house
selling prices reach a level where the homeowner is unable to borrow enough
money, or when the homeowner can't meet the regular mortgage payments.
The cost of borrowing money depends, to a large extent, on interest rates. A
rise in interest rates, can influence how far house sale prices increase, before
hitting resistance.
Negative Equity
Falling house selling prices can result in negative equity for homeowners who
have recently re mortgaged or bought a house. Negative equity is when the
value of the house is less than the outstanding mortgage debt. A homeowner
with negative equity can be under enormous pressure if they are already
struggling to meet mortgage repayments. The homeowner may need to
restructure their mortgage, reduce monthly payments, or extend the mortgage
term.
Falling House Selling Prices
Big problems can occur when the economy goes into a downturn at the same
time as interest rates increase. When this happens, homeowners face both
the problem of, high mortgage costs, coupled with falling house sale prices.
This can have a positive and negative effect on housing affordability.
Disclaimer: This real estate article does not give financial or legal advice.
When buying or selling a home, or taking out a loan/mortgage, or restructuring
a loan/mortgage - ALWAYS seek proper legal and financial advice. See
disclaimer below.
Click here to learn the step-by-step way to tackle real estate investing quickly,
safely, creatively and with minimal risk. Find out how to create WIN-WIN real
estate deals to make both buyer and vendor happy. How to structure real
estate deals so you make more on each deal and eliminate your risk!
Affects Housing Affordability
For years people have become used to rising house prices, and it is only
when market conditions change, many realize 'what goes up ... can come
down.'
A number of factors can affect the price of housing: the local economy, the
national and global economy, mortgage interest rates, taxes, income levels,
employment levels, business growth, consumer confidence and inflationary
pressures etc.
A Fall In Consumer Confidence
A fall in house selling prices can trigger a fall in consumer confidence. People
become more risk averse. This is because, most homeowners view falling
house prices, as a serious problem. A fall in consumer confidence can trigger
a fall in consumer spending.
Income Levels And Housing Affordability
The incomes of potential buyers affect how much house prices can increase.
Income levels need to keep pace with housing prices. If they don't, the dream
of owning your own home becomes unaffordable for many. This in turn can
affect the demand for housing, because people ask themselves 'what price of
house can I afford?).
Housing affordability varies from State to State and Country to Country and, is
generally measured by the ratio of home values to income levels. For
example, home values could be 2 to 4 times income levels. When this ratio
changes and house prices out pace incomes, housing becomes increasingly
unaffordable for many.
Housing affordability improves when house sale prices fall and/or incomes
increase altering the ratio.
Mortgage Commitments
Most homes are purchased with a mortgage, so the homeowner must have the
ability to make regular payments. Housing becomes unaffordable when; house
selling prices reach a level where the homeowner is unable to borrow enough
money, or when the homeowner can't meet the regular mortgage payments.
The cost of borrowing money depends, to a large extent, on interest rates. A
rise in interest rates, can influence how far house sale prices increase, before
hitting resistance.
Negative Equity
Falling house selling prices can result in negative equity for homeowners who
have recently re mortgaged or bought a house. Negative equity is when the
value of the house is less than the outstanding mortgage debt. A homeowner
with negative equity can be under enormous pressure if they are already
struggling to meet mortgage repayments. The homeowner may need to
restructure their mortgage, reduce monthly payments, or extend the mortgage
term.
Falling House Selling Prices
Big problems can occur when the economy goes into a downturn at the same
time as interest rates increase. When this happens, homeowners face both
the problem of, high mortgage costs, coupled with falling house sale prices.
This can have a positive and negative effect on housing affordability.
Disclaimer: This real estate article does not give financial or legal advice.
When buying or selling a home, or taking out a loan/mortgage, or restructuring
a loan/mortgage - ALWAYS seek proper legal and financial advice. See
disclaimer below.
Click here to learn the step-by-step way to tackle real estate investing quickly,
safely, creatively and with minimal risk. Find out how to create WIN-WIN real
estate deals to make both buyer and vendor happy. How to structure real
estate deals so you make more on each deal and eliminate your risk!
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Home Inspection Checklist
Home Appraisals
Home Inspection Report
Property Appraisals
Appraiser Inspection
Home Improvement Ideas
Home Inspector
Home Inspection
Housing Affordability
House Sale Prices
Find Homes For Sale
Pricing Your Home For Sale
Find A House For Sale
Homes For Sale By Owner
Compare House Prices
Home Market
House Prices
Home Inspection Checklist
Home Appraisals
Home Inspection Report
Property Appraisals
Appraiser Inspection
Home Improvement Ideas
Home Inspector
Home Inspection
Housing Affordability
House Sale Prices
Find Homes For Sale
Pricing Your Home For Sale
Find A House For Sale
Homes For Sale By Owner
Compare House Prices
Home Market
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