The News Media is Driving Home Prices Down

With a constant focus on price declines the National media has convinced the general public that home prices (and values) are in a continuing down hill slide. Whether it be CNN, Fox News or CNBC they each are sensationalizing news of falling home prices. They are quoting statistics from a small local market within a major metro area and labeling them as if the numbers applied to the entire metro market.

While there are local markets that have experienced double digit price declines, those are the markets had several years of double digit appreciation and now they are giving back those dollars. In some markets there was an incredible volume of home sales between 2003 and 2006. Many of these sales were facilitated by sub-prime arm mortgages and those buyers are now in foreclosure. The sales statistics on these foreclosure sales are now dragging down the home price statistics.

Ultimately, the value of a home is directly related to what it would cost to build a new home. This cost is not going down and in fact is going up. Many homes today are being sold at discounted prices because the media has convinced homebuyers and sellers that prices are declining.

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