Homeowner Confidence by Region
By: Amy Bohutinsky, Zillow VP of Communications | February 11, 2009
Earlier I reported on the always-surprising findings of our quarterly Homeowner Confidence Survey, which polls 1500+ U.S. homeowners about their perception of their own home’s value. Results show most homeowners are no longer in denial about whether their homes lost value in 2008 — 57 percent of U.S. homeowners say their home’s value declined over the past year, when in fact three-quarters (76%) of U.S. homes lost value. That’s a lot closer perception-reality gap than in July 2008, when only 38 percent of homeowners thought their home values had declined.
But as in prior quarters, homeowner perception varies quite a bit by region. The most realistic of the group? Northeasterners — 58 percent of homeowners who live in the Northeast think their home’s value declined over the past year. Meanwhile, 71 percent of Northeast homes lost value.
Least realistic were those in the South, where 70 percent of homes lost value, but only 47 percent of homeowners believed this to be true of their own homes.
Most unfortunate of the group — and we employees at Zillow are among them — are residents of the West, where a whopping 90 percent of homes lost value over the past year. Seventy percent of us acknowledge our home values have declined.
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- Categories: Real Estate Analytics, Real Estate Industry
Comments
15 Comments so far
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Joan Kinkade on February 11, 2009 7:05 pm
Amy –
This is a temporary phenomenon — most people realize that. If you have no need to sell your home now, don’t even try — it’s “value” is still there, will return. Value of my home will double again in next ten years. I don’t just think that, I know it, based on the experience of several lifetimes — my grandmothers, my mothers, my own. I never owned a piece of real estate that didn’t at least double in value within a relatively short period of time — even after horror of Carter “Great Recession” that left so many out-of work and even homeless. Some people formerly comfortable never quite recovered from that and died penniless (not such a bad way to die: you can’t take it with you) . Some people won’t recover from this: the ones who have no choice but to sell low if they can do that preforeclosure.
Ever heard the line: The race is not to the swift, nor bread to the wise, nor riches to people of understanding (surely you know the lines I allude to) — Time and Chance still happen, as in Solomn’s time and there actually could be “purpose” in God’s plan. How’s that for a reality check? Some people think God has nothing to do with the price of a house, yours or mine.
Jennifer on February 11, 2009 9:14 pm
Joan, aren’t you the realtor from the previous thread?
Most people with access to “experience of several lifetimes” know many people who bought a property and sold 10 years later for the same or less than they paid (and factoring in opportunity costs, realtor fees, maintenance, insurance, etc, etc) means the “break even” folks lost money too.
In fact, given the above carrying and transaction costs, real estate is generally a poor investment, barely beating inflation. See chart:
graphics.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Ever heard the line: “Buy Low, Sell High”? One must always consider where in the market cycle a transaction occurs when making the largest purchase of their lives. Those who bought in 2005 through today have truly undermined their financial well being. They will pay interest on an enormous mortgage debt based upon mania-driven house prices. Others with exotic loans, who think they can “just refinance later” will more than likely succumb to ARM recasts, negative equity, crushing mortgage payments, and simply hand the keys back to the bank.
Jennifer on February 11, 2009 9:18 pm
Sorry, above URL was too long, this shorter one points to the same house price chart:
tinyurl.com/HomePricesFor100Years
Joan Kinkade on February 12, 2009 7:16 am
Jennifer,
I am not a realtor.
(I wrote a reply, then lost it when I lost my Internet connection through a lousy link system — so will start again.)
My grandmother had little education, but was saavy in matters of real estate. Bought many a fixer upper, put in “sweat equity” besides her always CASH purchase price, owned something like 16 rentals, developed a street of 8 houses after WWII –used capital made in real estate to invest in stocks and vice vera, bought blue chips — like steel in early days, pharmaceuticals near end of her life in 74. Read the Wall Street Journal daily.
My mom missed out on graduating from high school — was truly a child of the Great Depression — once prosperous dairy farmers, family lost all when banks closed — and mortages then were only 5-year intervals, not 30-year. Mother later became a real estate broker, one of first independent women brokers in own town.
I learned a bit being raised by such women.
Yes, I’ve certainly heard about buy low, sell high. It helps to be in the right place at the right time. And yes, of course, it makes a lot of sense to try to be sure you can actually afford your mortagage payments. Ever heard the expression “sh*t happens?”
It’s just a simple fact that every house I ever bought doubled in ten years. I’m not saying I was always the owner by then. I doubled on first house in Capitol Hill, buying into a “slum” in hopes it could become “another Georgetown” (just before Hill was declared a “national historic area”) Bought at 21K, sold (in 4 years) at 42K — within next ten, that same house was “worth” about ten times that. Don’t recall what Zillow zesses it’s worth now — probably back down to about $400K.
I spent years renovating previous house in San Diego — sold wonderful ocean view at 595K in 1998, now “worth” 1.19 mil IF you put any “faith” whatsoever in Zillow numbers (which I dunt). Wasn’t that we didn’t know it would climb — I was just ready to call it quits with Point Loma — variety of personal reasons. Money REALLY ISN’T everything good in life.
We certainly witnessed the FLIP-IT MANIA in Scottsdale in 2005. Developers put property on the market at 9 am and were sold out by noon same day. That kinda speculation has never been my thing –like being a day trader in stock market, or getting caught in the Hunt Brothers’ gold rush. In fact, my BFF lost about 80% of her net worth buying more “on margin” just before the DOT COM crash!!!
Some people don’t know the bottom when they see it –are terrified it might get a liitle lower before it gets higher. Ever heard about a-holes who target a home they want, then wait, hoping for a foreclosure. Not that historic opportunity to buy low wasn’t ‘good enoguh” — those folks are looking for something more like a pit — in my not-so-humble opinion. Maybe they’ll find it through Zillow.
I’ll read the NYTimes article when I get a round tuit. Are they still headed for bankruptcy or what?
Joan Kinkade on February 12, 2009 8:00 am
O.K. Just did. Wonderful chart, from Irrational Exuberance — that’s what was definitely going on here in 2005 — as if migrating fruits and nuts from California were all becoming Zonies!! Pardon my political incorrectness, but I lived in So Cal too. “MAKE THE DESERT GREENER: BRING MONEY. I do think that AZ will recover well — baby boomers will be begin retriring if they haven’t already and no one want to shovel snow at 80 — hurricanes aren’t too swell either, no one like muggy humidity, and our pop is still projected to go from about 6 mil to 10 mil in relatively short span of time. It’s a great time to buy real estate in AZ. In fact, it couldn’t be better.
DebtFree on February 12, 2009 10:04 am
RE: “It’s a great time to buy real estate in AZ. In fact, it couldn’t be better.”
He, he!
housingtracker.net/askingprices/Arizona/Phoenix-Mesa-Scottsdale/
Kal on February 12, 2009 11:49 am
Either I’m missing the point or many of you are. You can of course say whatever you want in a blog, but the point is about whether a bottom is at hand, and by bottom, it’s more relevant to talk about the general bottom. I’m sure you can find regional strength somewhere, just as not everywhere is down like L.A., Las Vegas or Miami. But in general, as I said in the previous thread, until the employment and financial market stabilize, housing prices will not rebound. It’s simple supply and demand. And even when the housing market levels, it will still be slow to climb. So unless you happen to be in one of those luckier regions (like me), buying now hoping the bottom has already arrived is still risky, and the reward is not going to be as great as you expect. Bottom fishers are not going to support the whole market.
Kal on February 12, 2009 12:04 pm
Good for SO CAL or AZ if everybody retires and moves there. But who would be left making the rest of the world run. And even if those “retirement community” boom, the rest of the country may not. However, I do agree it’s smart to identify any up and coming areas and invest there ahead of any booms. But that’s often easy said than done. It may be good for those who sold at the height of a bubble, but a bubble is generally not a good thing. Remember Florida?
Joyce on February 13, 2009 4:07 am
Joan
This mess with subprime fallout affected every single person involved in real estate, supposedly the bedrock of building wealth for most American families. One report said the “value” of everybody’s home has dropped by 21%. Banks who approved loans didn’t actually hold those loans, ie, assume the risks associated with whether the person was likely to repay — they just repackaged the loans and sold them as “securities” to other “investors” like pension funds, took that money and made more questionable loans to people who did not even have to document their incomes. Of course, they didn’t care who they were lending to! So, easy loans overheated the market, drove prices up, people took out equity loans based on overheated prices, and now everybody is stuck owing more than their house (houses, if they were in the business) will sell for today.
Suppose you had sold Jacklin several years ago and parked the money in the stock market? Or a different property? What would have happened?
What a bunch of smart economists we have minding the store. This deregulation started under Clinton. Bush did not fix it. I hate all those banking executives, formerly known as conservative intelligent persons who were worthy of trust. And big salaries and bonuses. The computer model that determined subprime loans as packaged were statistically zero risk was based on only 5 years of data, the zero-risk thing made them hot sellers, so there was big demand for these mortgage-bundle securities.
Furthermore, some freelance accountant sent the SEC all info they needed on Madoff’s Ponzi scheme NINE YEARS AGO and kept updating them ever since, and the SEC did nothing. They let Madoff get by with a one-person CPA company to certify his accounts.
Now the foundations who invested with Madoff are hurting and so a lot of good works are drying up. Not to mention the formerly wealthy individuals who lost everything they had worked for throughout their lives. Bottom line: even the person with the specialized knowledege to figure out all this financial daring-do and send a warning was ignored. So what do they expect from the ordinary investor, including real estate? Clairvoiance?
Bob on February 13, 2009 9:47 am
I think it can probably be demonstrated that faulty and low zestimates at odds with formal appraisal are becoming self-fulfilling prophecy in many cases now. It might take awhile to collect data on that, but Zillow has played a role in the crisis too, which as O’Bama says could become a worse catastrophe. Like a Frankenstein, to some extent: they didn’t quite know what they were doing, and they don’t know how to fix much of anything.
DebtFree on February 13, 2009 1:14 pm
Bob, anyone who takes a “zestimate” seriously enough to effect their home buying decisions, probably shouldn’t be buying a house to begin with.
Prince William Homes on March 1, 2009 7:11 pm
This is interesting infor. I would assume that the contributing factors for consumer confidence of employment and the number of foreclosures for sale in a given area.
ann mosley on March 8, 2009 9:19 pm
As opposed to mere catastropy, I prefer the term craptastrophy (coined by funnyman — not Colbert, but the other one). With all the crap that’s gone into the making of this whole economic melt-down, sure works for me.
AILSA on March 10, 2009 7:13 am
Am after a loan but am very sceptical these days, there are a lot of sharks out there, can you point me to an article that explains all the different types of loans please? Thank you
buzzup.com on March 27, 2009 9:59 pm
Homeowner Confidence by Region…
Earlier I reported on the always-surprising findings of our quarterly Homeowner Confidence Survey, which polls 1500+ U.S. homeowners about their perception of their own home’s value….