Current value dropping below its original purchase price

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One common, though tragic, phenomenon that occurred during the Great Recession of the late 2000s was homes that were "underwater," where people took out mortgage loans to buy a house at a particular price before the recession, but later the home's value dropped below the amount still owed. People might argue that a home's value should never go "under water," that the value of a home should never dip below its original purchase price as long as the home has not deteriorated sufficiently. Why, however, is it illogical to dismiss the possibility of a home's current value dropping below its original purchase price?

Reference no: EM132319637

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