Which of the following best describes a situation where a property’s value decreases?

A decrease in a property's value is most accurately described by a scenario involving low demand and rising interest rates. When demand for properties falls, it indicates that fewer buyers are interested in purchasing homes, which can lead to lower market prices. Rising interest rates further exacerbate this situation by increasing the cost of borrowing for potential buyers, making home purchases less attractive and more difficult to finance. As a result, these factors create downward pressure on property values.

In contrast, the other options present scenarios that typically support or enhance property values. An expansion of the local economy generally leads to increased job opportunities and higher demand for housing, which can boost property values. A surge in rental prices typically indicates a strong demand for rental properties, which can reflect positively on overall market values, as higher rents can make property investments more attractive. Declining property taxes may suggest lower expenses for property owners, which can enhance cash flow and encourage investment in properties, thus potentially increasing their value.