Why is my home worth less today?

Many Homeowners are asking, "Why is my home worth less today than it was 3 years ago or even 6 months ago?". There are many factors that go into determining a home's worth but the biggest factor is the present real estate market condition. Areas across the nation have seen a drop in home values due to slow home sales and high foreclosure rates.

With a high increase in foreclosures across the country, this has left many homes up for sale that are selling for well below value. These factors influence home prices as appraisers consider recently sold inventory when determining home value.

Historically the real estate has always increased in value. This is just a temporary set back and real estate will begin to appreciate very soon.

If prices in your area are declining, however there has normally been consistent growth over 5 and 10 year time spans, you may want to take this opportunity to refinance and separate as much cash from the equity in your home as possible before values decline. Remember that home equity is not an asset in the classic sense, as it is illiquid and intangible beyond the whims of the market, but cash is very real and can be invested into your business or other true asset classes (and I'm not talking about a a boat!) for a solid return while you're waiting for the housing market to continue correcting itself.

If your home value is declining and you have no plan of selling in the near future, consider getting a Home Equity Line of Credit (HELOC) to protect the equity already built in the property. Since the available credit of a HELOC is approved based on today's value, you will still have access to the equity built in today even when your property value declines and equity evaporated in the future. Also keep in mind that you do not pay interest on a HELOC unless you actually borrow from it.

Most areas that are decreasing in value will turn around and the values will begin increasing again. Bear in mind that not only have we become accustomed to home prices and values skyrocketing over the past few years, but this has been quite extreme in most areas of the country. Typical home value appreciation is anywhere from 3-5% in most areas. What a lot of people have come accustomed to is well beyond that 3-5 percent average and is much higher. There are some areas of the US that have seen 30-40% home value jumps each year for the past couple of years and many areas across the US have grown anywhere from 10-20 percent on average each year. These numbers are just not typical and the US economy can not support housing values increasing like they were. Therefore, the more stagnant-declining real estate market could actually be viewed as somewhat of a good thing. While everyone wants to see there property values increase, they do not want to try and sell their home and not have any buyers because the home is too expensive or have to buy another home that is way overpriced.

» DISCLAIMER: The information contained in this article on 'Why is my home worth less today?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.