Homeowners No Longer in Denial: Study
Americans have finally come to terms with the housing crisis, according to Zillow's Q4 Homeowner Confidence Survey, after surveys in recent months revealed an overwhelming majority of Americans were actually in denial over the state of the housing market. More than half of America's homeowners -- 57 percent -- believe their own home lost value during 2008, according to the survey. This is markedly more than the 38 percent who believed their home's value was declining when asked during the second quarter of 2008. In reality, 76 percent of all U.S. homes lost value in 2008, according to analysis of the Zillow Q4 Real Estate Market Reports. With these new findings, Zillow's Home Value Misperception Index shrunk to 10 in the fourth quarter, from 16 in the third and 32 in the second quarter. An index of zero would mean homeowners' perceptions were in line with actual values. "It's clear that the 'not my house' sentiment that was so prevalent in earlier surveys is waning, and homeowners are opening their eyes to the unfortunate reality of significant losses in home values across most of the country," said Dr. Stan Humphries, Zillow's vice president of data and analytics. However, when asked what the near future will bring for their homes, most homeowners expressed optimism, and appear to believe that the worst may be over -- believing perhaps, we've bottomed out. According to the survey, more than two-thirds of homeowners believe their home's value will either increase or stay the same in the first six months of 2009. Only 30 percent believe it will decrease. "[T]here's a curious optimism for homeowners when asked about the future - most seem to believe we've hit a bottom and the worst has passed. Unfortunately, the data tells another story. With year-over-year home value losses continuing to accelerate, most areas of the country will see housing values get worse before they begin to stabilize." But homeowners' optimism for the future doesn't necessarily extend to their neighbors' homes. While 70 percent of homeowners think their own homes' values will increase or stay the same in the first half of 2009, only 52 percent believe home values in their local market will increase or stay the same during the same time period. 48 percent think values in their local market will decrease, but only 30 percent believe the same will happen to their own homes. Homeowners are still more optimistic about their local market than in the third quarter, however, when 57 percent said values in their local market would decrease in the next six months. Write to Kelly Curran at firstname.lastname@example.org. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.