A recent report by the Deutsche Bank predicts that by early 2011 almost half of all home owners will be upside down on their home loan. This simply means that they have a mortgage that is for more than the current value of the home. This equates to approximately 25,000,000 million home owners who will have lost value in probably their most expensive asset. For many people, it’s too late to sell their home because they’re already upside down and the most troubled housing markets are already glutted with foreclosed homes. If you are fortunate enough to live in an area that hasn’t been plagued by foreclosures and want to know what the future holds for your homes value, there are a couple indicators to tell which way the housing market is heading.

These troubling signs indicate a falling housing market:

Foreclosures

If your neighborhood is plagued by foreclosures this is a very bad sign. When one house on a block goes into foreclosure, your homes value goes down 1% and each additional home that goes into foreclosure sends house values down even further, then it becomes a whirlpool of decline with each successive house in foreclosure causing house values to drop in a vicious circle. The housing market is still in serious trouble with more trouble predicted for the future as housing values continue to drop, more people become upside down in their mortgages, more mortgages are due to adjust and still thousands of people are unable to find work.  

Homes Aren’t Selling

Traditionally, homes should sell in three months or less. If you see homes going unsold for long periods of time, it means that sellers probably don’t want to lower their price. This may be because they’re losing all their equity or if house prices have dropped really low, then the sale price may not even cover what they paid for their mortgage. Homes not selling equals a declining market.

Increasing Unemployment

It’s no surprise that the cities and states being hit hard by unemployment are also experiencing some of the greatest declines in home values. Unemployment means more foreclosures and it also means people are forced to move in order to find work. There is almost a direct correlation between unemployment and declining home values, if you see unemployment on the rise in your area, bet that the housing market is on the way down.

Neighborhood Blight

If you are noticing more and more houses in your neighborhood are beginning to show wear and tear and not being properly maintained, then this will bring down the value of all houses in the surrounding area. Unfortunately this is a symptom of chronic unemployment  as  people can no longer afford to maintain their houses or it may be that they realize their house is no longer worth investing in because it has already lost too much in value. If you notice houses in your area where the grass isn’t mowed, the houses aren’t painted regularly, and the landscaping isn’t maintained then brace yourself for falling home prices.  The condition of your neighbor’s house directly affects the value of your own home.