Select the correct answer.

Question

How can a poor housing market put home buyers in a financially unstable position?
A.
Changing property values means it’s easier to find homes with low rental costs.
B.
When the home value decreases, property taxes and insurance costs increase.
C.
Houses are valued lower than their purchase prices, so the home equity decreases.
D.
Home buyers lose all tax benefits and tax incentives when the housing market goes down.
E.
Mortgage payments can increase even though the home value decreases.

Answer 1

The correct answer is: C. Houses are valued lower than their purchase prices, so the home equity decreases.

This option reflects how a poor housing market can lead to negative equity, putting home buyers in a financially unstable position.