Zillow News
Thu, 05/14/2009 - 15:30
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However, Three Out of Four Homeowners Think a Bottom Has Been Reached and Are Optimistic About the Future, According to Zillow® Q1 Homeowner Confidence Survey
SEATTLE, May 14 -- American homeowners have a solid understanding of what has happened to the values of their own homes over the past year. A majority (60 percent) believe their own home lost value during the past 12 months, according to the Zillow Q1 Homeowner Confidence Survey(1). In reality, 80 percent of homes across the country lost value during the past 12 months, according to Zillow's first quarter Real Estate Market Reports.
Additionally, 18 percent believe their own home gained value in the past 12 months, and 22 percent believe its value remained the same. That resulted in a Zillow Home Value Misperception Index(2) of five - the lowest it has been since Zillow introduced the index in the second quarter of 2008 - and down from 10 in the fourth quarter of 2008. A Misperception Index of zero would mean homeowners perceptions' were in line with actual values.
More accurate perceptions of the past gave way to hope for the future. Most homeowners - 74 percent - believe their home will not decline in value in the coming six months, effectively calling a bottom to their own home's housing slide. Specifically, one in four homeowners (27 percent) think their home's value will increase in the next six months, while nearly half (47 percent) believe their home's value will remain the same. Homeowners were similarly optimistic when it came to predicting home values in their local markets. About two-thirds of homeowners believe home values in their local markets will increase (26 percent) or stay the same (37 percent) over the next six months. Thirty-seven percent believe home values will decrease.
As for selling activity, it's clear a significant number of potential sellers are holding back due to the current market. When asked about future plans to sell, 31 percent of homeowners said they would be at least "somewhat likely" to put their homes on the market in the next 12 months if they saw signs of a real estate market turnaround(3).
"The perception of American homeowners is finally catching up to reality, which is that 80 percent of all homes in the country lost value during this past year," said Dr. Stan Humphries, Zillow's vice president of data and analytics. "While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward with three out of four homeowners believing that their own homes' prices will increase or be flat over the next six months. Unfortunately, there are few markets we expect to perform this well."
Humphries continued, "Also interesting is the information we have for the first time this quarter on the levels of 'shadow inventory' - homes that people would like to sell but that aren't currently on the market, and thus aren't captured in the official number of homes on the market. With almost a third of homeowners poised to jump into the market at the first sign of stabilization, this could create a steady stream of new inventory adding to already record-high inventory levels, thus keeping downward pressure on home prices."
Homeowner Perception by Region
Homeowner Perception of Home Value US Q1
Change in Past Year by Region 2009 Northeast Midwest South West
My Home's Value Has Decreased 60% 57% 66% 49% 75%
My Home's Value Has Stayed the Same 22% 20% 19% 29% 15%
My Home's Value Has Increased 18% 23% 15% 22% 10%
Market Reality: Homes Reporting Year-over-Year Value Changes in Q1,
according to Zillow
Actual Percent of Homes that
Decreased 80% 79% 80% 74% 89%
Actual Percent of Homes that
Stayed the Same (+/-1%) 3% 4% 4% 3% 2%
Actual Percent of Homes that
Increased 17% 17% 16% 23% 9%
Q1 2009 Home Value Misperception
Index 5 11 2 7 2
Q4 2008 Home Value Misperception
Index 10 3 5 14 13
Q3 2008 Home Value Misperception
Index 16 20 15 13 13
Homeowner Perception of Own Home's Value in Next Six Months
My Home's Value Will Decrease 26% 23% 32% 26% 25%
My Home's Value Will Stay the Same 47% 45% 42% 50% 48%
My Home's Value Will Increase 27% 32% 26% 24% 27%
(NOTE: Column percentages may not total 100 percent due to rounding)
Western Homeowners' Perceptions Catch Up With Reality
With a Misperception Index of two - down from 13 in the fourth quarter - the perception of homeowners in the West was closest to reality, along with that of homeowners in the Midwest. Northeastern homeowners' perception of their own homes' values were the farthest from reality, with a Misperception Index of 11, up from 3 in the fourth quarter.
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