Will Continued Lackluster Employment Growth Further Impact Home Values?

The housing market has been struggling for some time now, and reports released within the last week show that it continues to fall.  Those who bought their homes when the market was booming are finding themselves left with an investment that may not pay off, and some are even having trouble keeping up with their mortgage payments.

The increasing unemployment rates are definitely contributing to this problem, as there are fewer people looking to purchase a new home.  Most people are struggling with the most basic financial obligations, making them unlikely to take on the further financial burden of a mortgage.  The housing market has seen a rapid increase in foreclosures, which has also been driving home values down.  Why pay full price for a home when you can get an incredible discount rate at a foreclosure auction?

Additionally, buyers are nervous to invest large amounts of money considering recent trends.  Home prices have been dropping for more than two consecutive quarters, and within the last year they are down another 7 percent in several major cities.  The bad news, of course, is that those looking to sell their homes are likely to lose money.  Some may be able to hold off until the market begins to recover, while others aren’t blessed with that option, and must take the hit.

The good news, however, is that things can’t realistically get too much worse.  The next year may see further drops in home prices, but it is incredibly unlikely that this trend will continue for much longer.  Homes will always be a high cost item, especially in certain localities, and they will never drop low enough to be considered a crash market.  The market is certainly approaching rock bottom, but the great thing about rock bottom is that there is nowhere to go but up, up, up!