What are General Causes of Declining Property Values?

Declining property values are the main cause of concern for many homeowners because it can lead to “upside down” mortgages. The drop in value can leave a loan amount that higher than what the home is worth. Here are three causes of declining property values:


When your property is in a location where several properties are being foreclosed, your property value will decline. Foreclosures are usually sold at very low prices, bringing down the property of your home because appraisers use comparable neighborhood sales when establishing a value.


Your property value will decline if it suffers from damages due to disasters, such as an earthquake, flood or fire. For this reason, you must have homeowners insurance to replace structures and repair damages. Also, your home will depreciate because of a disaster until the property is restored.

Rising Crime Rates

As crime rates increase in a particular neighborhood, property values decline. The decline can be a rapid and sharp decline. Buyers don't want to risk their personal or property safety, and therefore, they won't buy in a neighborhood where crime is on the rise. As a result, homes in that location will depreciate.

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