Homeowner Confidence Shrinks (Yet Most Think the Worst is Over)

15 Comments so far

1. DebtFree on May 14, 2009 1:07 pm

   Amy writes: “in a fast-changing (and unfortunately, still-declining) housing market.”

   Why does one view improving home affordability as “unfortunate”? Instead, isn’t it unfortunate that so many people imprisoned themselves with debt to take on impossible mortgages at 8-10X incomes?

   As for the homeowners who believe home values will not decline in the next 6 months, that’s not optimism, it’s denial. How can we be near a “bottom” when GM and Chrysler are on the verge of bankruptcy, foreclosures rates are climbing each month, unemployment is climbing, layoffs are on the rise, incomes are declining, and the toxic financing made available in the bubble years is gone?

   When easy credit is available (as during the bubble years) it’s easy to confuse debt/credit with income. However, as credit has tightened, and unemployment and layoffs mount, that fantasy is dashed on the rocks as debts must be repaid, and there’s no income and savings.

2. AmyB on May 14, 2009 2:15 pm

   Hi DebtFree, nice to see you again.
   I say “unfortunately” in the context of the homeowners who responded to this survey. Most homeowners would agree it’s painful to see your home’s value decline (and thus why, as you state, many may be in denial).

   But you’re right that for a buyer - particularly a first time buyer without a home to sell - declining home values are a fortunate circumstance.

3. Anthony on May 14, 2009 3:00 pm

   Home prices are NOT going up. Do yourself a favor and read patrick.net and enlighten yourself if you are one of the non-believers.

4. Zillow.com Survey Shows 75% of Homeowners Think the Worst Is Over | Is the worst over? on May 14, 2009 4:12 pm

   [...] Zillow.com blog, emphasis in the original [...]

5. Turkish Property Market on May 14, 2009 8:52 pm

   It really depends on the homeowners of the property, because if your home is still in auction for a few months, that’s the time they increase their prices, and it keeps on coming until someone bought it.

6. Mark Lindsey on May 14, 2009 9:51 pm

   Everyone thinks that rising home values is a good thing. Here’s a little food for thought.

   Say you bought a 100k home and it increased in value 20%, you now have a home worth 120k. When you sell you will pay at least 10k in realtor fees etc. So you have made 10k. Here is the catch.

   The nex house you want to move up to went 10% as well. Let’s say it is 200K and now worth 240k.

   So, if the market goes up 20% and you want to move you just lost 30k. (new home 240k - 110k equity in your current home).

   This cycle only gets worse if you want to move up.

   Let’s take it up another 20% now and see what happens. Current home value 120K goes up 20% now worth $144k, less selling costs you get net about $130. The new house you want to buy was $240 but it went up too and it is now worth $288k. $288 - 130k, your spread is getting worse.

   Now tell me house increasing home values is good for us?????

7. Daily Digest for 2009-05-14 | Joe Spake - Memphis Real Estate on May 15, 2009 12:35 am

   [...] Posted an item Joe Spake: Homeowner Confidence Shrinks (Yet Most Think the Worst is Over) [...]

8. Top 5 real estate posts of the day – Friday 5/15/2009 on May 15, 2009 8:08 am

   [...] Homeowner confidence shrinks – Survey shows only 60% of homeowners think their home value has decreased over the last year [...]

9. Carnival of Real Estate #142 | Minnesota Investment Property Blog on May 18, 2009 7:48 am

   [...] Zillow blog is always a great source of market data.  In their post:  Homeowner Confidence Shrinks (Yet Most Think the Worst is Over), they validate what most of us in the business have been sensing for a [...]

10. Real Estate News You Don’t See on the News - from The Cutting Edge - May 19,2009 | Memphis Real Estate Buzz on May 19, 2009 7:18 am

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11. Homeowner Confidence Declines, But Most Optimistic About Future | Reverse Mortgage Guides - News on May 26, 2009 12:12 pm

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12. Richie Naggar Broker on May 26, 2009 1:38 pm

    Real Estate cycles (17 of them so far) are predictable for the most part with some exceptions. If you research these cycles, the next peak is projected for 2022. Yes, Real Estate will come back. Yes, lots of money will be made. However, when to get in or get out is the challenge only for the greedy and the short termers. As a long term investment, it holds. As a write-off with a potential good rate of return, it stands. Currently, the downturn is trying to find its legs. So far, it is still in a Yoga position. Out of Food, shelter and clothing, shelter has been compromised. Until that is restored, there will be no confidence or recovery in the industry or economy. Wall street killed the goose that layed the golden eggs…namely the American dream of owning a home. What folly. What shame. What greed.

13. Kenneth Fisher on May 26, 2009 7:40 pm

    Home prices will go up in some places and down in others. The market is a living cycle, or acutally a lot of them. The beauty of it is that is in its inefficiency. There is nobody who sets the price. Only supply and demand. If you have a nice home in a nice place where people want to live, the values will likely go up. Yes, financing is a little difficult to get right now, but that is a bankig industry problem, not a problem with real estate and the fundamentals which make it a good investment vehicle. Its really a bet on our economy. People purchase a home to live in based on the means they have and the luxuries they desire. Smart investors buy property for invesment based on formulas focusing on cash flow. The consumers opinion of whether home values will rise or fall is very interesting. The people who thought their homes value went up were the closest to actuality, according to zillows survey, and we all know how accurate those always are.

14. Vickie Flowe on May 27, 2009 4:23 am

    Out of Denial?
    Good, now only 4 stages of grief left to go.
    We need to grieve the loss of a market that has had a slow, lingering death. The market as we knew it is gone. Builders, brokers, consumers, vendors and investors would benefit by understanding the grief process.
    Five Stages Of Grief
    1. Denial and Isolation.
    Are we still in denial? The comparables and appraisals are showing huge differences between 2009 and 2005-2007 numbers. At first, we tend to deny the loss has taken place, “this can’t be happening” and we withdraw from our usual social contacts.
    2. Anger.
    Angry at the banks, angry at the buyers who should have known better, angry at the agents and brokers who should have known better, angry at the government who should have known better. Angry at ourselves for thinking we knew better. Even if, realistically, we know that anger only delays progress.
    3. Bargaining.
    If you will take the listing at a reduced rate, I can get my price. If you cut out print advertising, what can you do to make up the difference? “If I do this, will you take away the loss?”
    4. Depression.
    Anger turned inward; numb and number. Frustrated. Bitter. Keep guns out of your house.
    5. Acceptance.
    This is when the anger, sadness and mourning have finally tapered off. It is what it is; accepting the reality of the loss is the final step. True acceptance. Not resignation. Accepting that what was is what was. That what is is something entirely different.
    We have recently helped a family through this process. The asking price was $20,000 less than it would have been 2 years ago. It received multiple offers, sold and closed in 45 days to solid buyer at w/ good credit scores with 20% down.
    Acceptance ensures focus on opportunities.

15. Brad the Builder on September 10, 2009 5:06 am

    Interesting articles, many thanks