Falling house prices and negative wealth effect
Consumers see a fall in their main asset. This decline in wealth causes lower spending and higher saving. Many households become trapped in 'negative equity'. This occurs when the value of the house is less than the price they paid for it.
Why do property values decline?
“If an area sees negative changes, such as an increase in crime rates, a decline in local amenities or the deterioration of infrastructure, it can negatively impact home values. Changes in zoning laws or the introduction of undesirable developments nearby can also lead to a decline in home values.”
Why is a housing crash bad?
When home prices drop during housing market crash, homeowners can end up owing more on their mortgages than their homes were worth and can no longer sell their homes to get out from under crushing mortgage payments.
Will 2024 be a good time to buy a house?
According to current insights and forecasts, there's no indication that the housing market will crash in 2024. Instead, the evidence suggests that home prices will remain stable or moderately increase due to limited inventory and steady demand.
How did declining house prices affect the economic recovery?
Housing's Indirect Impact on the Economy
Rising home prices likely encourage additional construction spending to take advantage of higher prices, leading to more robust economic growth. A decline in housing prices is likely to depress construction spending, leading to more anemic economic growth.
How many people use real estate apps?
U.S. consumer interest in real estate apps remained strong in 1H21, climbing 14 percent year-over-year to more than 23 million installs from 20.3 million in the year-ago period. The top 30 apps of this type experienced a record quarter in Q1 2021, seeing more than 12 million downloads.