First Saturday as the World Turns

Why have homes lost value?

By Ed Rogers

I had a thought the other day. It came to mind that house prices going up and down made no sense. If it cost you $100,000 to build a house today, and five years from now it cost $150,000 to build the same house; why would your house only be worth $75,000.
    The first answer I could come up with, in my mind, was it had to be the banks. I’ve always believed in the saying, “Follow the money.” In the past, as it is now, market value has little to do with what your house is worth. Before all the crooked dealing throughout the nineties, the cost of labor and material set the bottom line for value. These costs the bank covered by a building loan, which the contractor paid off from selling the house.