Homeowners More Optimistic About the Future Than Any Time in Past Year
By: Amy Bohutinsky, Zillow VP of Communications | August 17, 2009
Four times a year, we field a survey with Harris Interactive to get a pulse on how homeowners perceive the value of their own homes and their local real estate market. Our quest – to find out how realistic homeowners are about their own homes’ values, and how optimistic (or not) they are about the coming six months.
It’s a fascinating trip into the psyche of owning a home in the midst of the greatest housing recession of our generation. Are we realistic? Are we in denial? We’ve seen it all in the past year, and this quarter’s results are telling of a group that largely “gets it” about the bad news, but just wants things to get better. By the numbers, here’s what we found:
Similar to Q1, most homeowners acknowledge that their own home’s value has declined over the past year:
• 22% think their home’s value has increased
• 19% think their home’s value has stayed the same
• 60% think their home’s value has decreased
But – 83% of U.S. homes declined in value over the past year, according to analysis of Zillow’s Q2 Real Estate Market Reports – up from 80% in Q1. With more homes losing value, the “misperception gap” between homeowner perception and reality grew to a Home Value Misperception Index of 13, up from 6 in the first quarter, and up from 11 in Q4 2008. An index of zero would mean homeowners’ perceptions were in line with actual values.
Along with growing misperception is a growing optimism that home values will not continue their declines in the coming six months. For three quarters in a row, homeowners have effectively called a bottom, with the majority thinking their home’s value will not decline any further. This quarter, the number of “optimists” was our largest yet:
• 34% think their home’s value will increase
• 47% think their home’s value will stay the same
• 19% of homeowners think their home’s value will decrease
The most optimistic bunch are homeowners in the South and Northeast, where fewer markets experienced a “bubble,” and where home value declines haven’t been as precipitous as many major cities in the West.
Are homeowners on to something the numbers aren’t showing? Or is this simply a coping strategy after many months of watching equity shrink away? Every market is obviously different, and we’d like to hear what you think about homeowner perception, and its impact, in your area.
- Stumble it!
- Categories: Real Estate Analytics
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Top 5 real estate posts of the day for 8/18/2009 on August 18, 2009 8:01 am
[...] Homeowners more optimistic about the future than any time in past year – The quarterly report is out and homeowners are starting to feel a little more optimistic than [...]
DebtFree on August 18, 2009 11:25 am
RE: “is this simply a coping strategy after many months of watching equity shrink away”
Yes, AKA “denial.”
Unemployment remains at record highs. Mortgage delinquencies have skyrocketed. The nation’s manufacturing base has been destroyed. Our high-paying white collar jobs are shipped overseas en masse.
Housing Bubble “equity” was nothing but an illusion (aside from the very few who sold at the peak in 2006 and parked money in the bank).
Incomes have not risen 100% on the last 5-6 years as housing prices have, with money available to buyers (and equity-extracting owners) only due to lax lending standards and toxic lending products (0% down mortgages, ARMs, NegAm, Interest Only loans, etc). These loan products are not coming back.
Where does that leave us today?
* Flat to declining income/wages.
* Unemployment at record highs, with no industry to provide a recovery.
* Housing remains unrealistically priced near peak levels.
* Easy money lending gone.
* Lenders expect 20% cash down, good credit scores, little consumer debt, and an accurate appraisal.
* Deep national recession, will drag on for years.
* Consumers buried in debt, living paycheck to paycheck.
* 1/3 of all mortgages underwater.
* The past few years of “prosperity” were not the result of innovation or an expanding industrial economy, but were instead the result of consumers extracting “equity” from houses, and getting deeper into debt. Granite counters and a new $50,000 H2 at 8 miles per gallon?
In short: this mess has only just begun, and there’s nothing visible on the horizon that will get us through. Worse yet, politicians aren’t even addressing ANY of the above, and are instead focused on socialized medicine and other pandering issues as the City on a Hill burns.
RG on August 18, 2009 3:40 pm
Agree with the poster above.
This is all wishful thinking.
The main drivers of home prices are employment and access to credit.
With unemployment estimated to be at 10+% by next year (20+% if you include workers that are only part time but with they were full time), and with banks saying the credit crunch will most likely last till mid/end of 2010, how can house prices stay the same or even go up?
Wheaties on August 18, 2009 4:41 pm
Wait, wait, let me get this straight. While home prices rose 10-15% each year for 5 years straight around the NY area people think they’re going to keep going up? Boston and NY are the town areas in the country where even at 5.0% interest rates the median income family could not afford the median priced home. I just don’t get it. How can they not come down further? There’s some real delusion going on.
Fasone on August 18, 2009 4:54 pm
Anyone else fearful of what may happen should the Federal Govt. discontinue the first-time buyer tax credit? What modest gains that are being made may all be soon enough erased…Looking for any/all responsible bill payers. We all have to get through this together. Don’t yet own a 2nd home? Concerned about your monies in other markets as well? Save you neighborhoods and buy bank-owned! Joe Fasone 203-772-5712 to save a neighboprhood in New Haven County, CT
Bob on August 18, 2009 5:36 pm
To some degree I think the sellers themselves aren’t sure what their homes are worth with the amount of change we’ve seen in the markets in the past 2 years. I recently went condo shopping in NJ. In one tower I liked I saw 4 units which were essentially the same. The prices varied widely for no reason that was apparent and the agent didn’t have an explanation. I saw a unit at 250K and nearly the same at 305K. In another older tower I saw units ranging from 140K (distressed) and similar units (slightly better shape but not much) for $169K and 195K.
I’m not sure if I am typical of buyers but I’ve got the money but won’t be buying unless I see a really good deal and even then will not be paying the ask. If the seller doesn’t like that I’ll move on - plenty out there.
Daily summary of real estate news, Memphis comments, and other interesting stuff – August 18th, 8:13pm | Memphis Real Estate Buzz on August 18, 2009 6:21 pm
[...] Homeowners More Optimistic About the Future Than Any Time in Past Year | Zillow Blog – Real Es… "Four times a year, we field a survey with Harris Interactive to get a pulse on how [...]
buying a home in Tracy, Ca on August 18, 2009 8:21 pm
This is so interesting to listen to. My boyfreind and I have been looking to buy a house for the past month or so. The houses have 10 offers or more within a day of being on the market. They are going for 35-50K over asking and tons of cash paying investors. It has been extremely frustating and we have been talking about waiting to see what happens with the market. It just seems every article contradicts what I just read.
Buying in Tracy CA
Real Estate News You Don’t See on the News | Memphis Real Estate Buzz on August 18, 2009 9:11 pm
[...] Homeowners More Optimistic About the Future Than Any Time in Past Year | Zillow Blog – Real Es…“Four times a year, we field a survey with Harris Interactive to get a pulse on how homeowners perceive the value of their own homes and their local real estate market. Our quest – to find out how realistic homeowners are about their own homes’ values, and how optimistic (or not) they are about the coming six months.” [...]
Fasone on August 18, 2009 9:57 pm
RE; BUYING IN TRACY, CA
SAME IS HAPPENING IN MY MARKETPLACE AS WELL! AN AGENT WITHIN MY OFFICE HOSTED AN OPEN HOUSE THIS PAST WEEKEND…APPROX 100 ATTENDEES, AND HOME HAS SINCE SOLD FOR THOUSANDS OVER ASKING, AND BUYER IS WAIVING THEIR INSPECTION - - JOE FASONE OF ERA PROPERTY WORLD, MILFORD, CT 203-772-5712
Fasone on August 18, 2009 10:02 pm
RE: BUYING IN JERSEY
BUY THE BANK-OWNED AND HELP OUT OUR ECONOMY. IT MAKES FOR A GOOD STORY 15 YEARS FROM NOW WHEN EVERYONE TELLS YOU HOW WELL YOU DID. CONSIDER PURCHASING THE PROPERTY WITH A 203K HOME RENOVATION LOAN(FHA-INSURED) AND START YOUR OFFER AS LOW AS YOU ARE COMFORTABLE WITH. NOTHING VENTURED, NOTHING GAINED!
sal on August 19, 2009 11:40 am
joe, stop.
DebtFree on August 19, 2009 12:46 pm
Buying in Tracy CA wrote: “They are going for 35-50K over asking”
Asking price is mostly irrelevant. What matters is how the sale price relates to previous sales on the same street/neighborhood.
If the houses are selling for 30% below 2005 prices, but “35-50K over asking,” that’s a good thing.
But why buy now when prices will decline another 30%?
Housing May Finally Be Turning Around - CBS MoneyWatch.com on August 20, 2009 12:22 pm
[...] are changing, too. According to a survey conducted by Zillow.com, a majority of homeowners now think the value of their home will not decrease any more in the future. The survey said 34 percent think their home’s value will increase, 47 [...]
Dan on August 21, 2009 8:32 am
I’ll bet these people have a hard time estimating their house value!
http://recessionhouses.blogspot.com/
Rick on August 25, 2009 2:45 pm
It’s unrealistic to project home value increases in most major markets due to the honest and accurate comments made by DebtFree and RG in earlier comments. Only those with a 5 to 10 year outlook in their current home can count on home equity appreciation of any significance.
joe fasone on August 25, 2009 8:54 pm
The Northeast may be able to get out of the weeds in 24 months…let’s all do what we can to get responsible bill payers into homes.
http://www.thedeflationtimes.com | Home Values? Perception vs Reality on August 26, 2009 7:28 pm
[...] 17 more points left to go to reach the mark of ‘100% of U.S. homes declined in value.’ A chart from Zillow’s Q2 Real Estate Market Reports paints the current [...]
Have Overpriced Home Values Prolonged a Recovery? on September 4, 2009 9:01 am
[...] let go of the equity they thought they had in ‘05. That said, a couple recent surveys from Zillow and Homegain prove that there’s still a small disconnect. Homegain’s survey showed that [...]
Home Values? Perception vs Reality « The Deflation Times @ Wordpress.com on September 8, 2009 11:36 pm
[...] left to go to reach the mark of ‘100% of U.S. homes declined in value.’ A chart from Zillow’s Q2 Real Estate Market Reports paints the current [...]
Release Equity on October 5, 2009 8:09 am
Well that certainly sounds like good news.
PropertyMortgages on November 3, 2009 6:22 am
Lets hope it is light at the end of the tunnel.
November 19th Daily Report « The LYON Uncaged on November 18, 2009 4:09 pm
[...] Each quarter we track Homeowner Confidence across the U.S. and more specifically, how homeowners’ perception of their own home’s value compares to reality. We’ve seen a lot of changes in the past six quarters, as homeowners have inched closer to reality by acknowledging widespread home value slides. [...]