What is one risk associated with owning real estate?

Market fluctuations affecting property value is a significant risk associated with owning real estate because the value of a property can rise and fall based on various factors, including economic conditions, changes in supply and demand, and interest rates. When there is a downturn in the economy or a decrease in demand for real estate, property values can decline, potentially leading to situations where the homeowner owes more on the mortgage than the property is worth. This phenomenon is often referred to as being "underwater" on a mortgage. Consequently, this risk can impact the owner's financial stability and the potential return on investment when selling the property.

Appreciation in property value is generally perceived as a benefit rather than a risk, as property owners typically hope for their investment to increase in value over time. Tax credits and interest rate reductions offer financial advantages to property owners and are not associated with risks.