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Supply And Demand Is A Better Explanation Than "There's Something Wrong With This Place"

Don't mistake the reduction of a home's listed price as a signal that something is wrong with the home.

In many parts of the country -- the supply of homes for sale is outpacing the demand for homes.  When supply exceeds demand, there is a downward pressure on price until a balance point is reached. 

During the recent boom in real estate, this economic equation was reversed, creating upward pressure on prices.

Supply and demand in today's market can be illustrated by a seller listing their home at a price and finding few potential buyers.  When the price drops, however, more buyers suddenly show interest in the home. 

Further price reductions, of course, bring even more interested buyers until a deal is made and the home goes under contract.

When supply exceeds demand over a long period of time, prices tend to drop and that is why a market like this one is called a "Buyer's Market". 

Price reductions don't signal problems with a home, but merely that it was priced too high to find a buyer given the current market's supply and demand.

(Image courtesy: Biocrawler)