Strangely, “Not My House” Sentiment Continues, Albeit a Smaller Group

80 Comments so far

1. GregC on October 29, 2008 10:15 am

   Perhaps this is because for the vast majority of homeowners in the country the value of their home TO THEM has not changed.

   It is still generating the imputed rent of a place to live and shelted and enjoy with their families. Perhaps they do take the long range view that their home has neither lost of gained value - to them - until they cash it out. Perhaps the 21% who believe value will increase in the next six months are correct as Karl Case predicts, albeit not necessarily in six months. According to Case Shiller regional segmented data by market prices are indeed firming in high end categories around several major cities and the trend seems to be spreading. This from verified, validated data.

   Zillow’s transparent attempts to generate free PR through a variety of studies using pricing methodology and survey methodology that have never been academically verified contribute the the lack of clear direction on what is truly going on in the housing market. It’s fun to see though and congrats on generating so much press out of so muh fluff.

   Using Zillow as a seller for anything but the most general regional trend around one’s town/region is useless and dangerous. Far better to spend $400 for an appraisal from someone who does it for a living before setting a realistic selling price.

   A loyal Zillow watcher.

   PS: In many western US markets, and Boston and elsewhere inventory is actually shrinking and that trend is speeding up.

2. Breed on October 29, 2008 11:10 am

   It would be worth investigating this to see the trends on a market-by-market basis. Each region has markets that are getting hit much harder than others.

3. GregC on October 29, 2008 11:50 am

   I’ve done exactly that using Case Shiller segmented pricing data for Boston - through August. Here’s a rough summary:

   Peak to Trough (Sept 05 - Aug 08) Change in Prices:
   Lower Tier Homes: -18.79%
   Mid-Tier Homes: -13.87%
   Upper Tier Homes: -7.20%

   5 Year Change in Prices:
   Low Tier: +1%
   note I don’t calc mid tier for this period
   High Tier: +7%

   One Year Change Aug 07-Aug 08:
   Low Tier: -12.49%
   Mid Tier: -7.49%
   High Tier: -2.54%

   Month Over Month (July - Aug 08):
   Low Tier: -0.08%
   Mid Tier: -0.10%
   High Tier: +0.09%
   note: this is a fairly meaningless statistics because of seasonality

   So, what we see is that the Boston market is indeed made up of several markets and the low end where subprime mortgages were much greater factor is more heavily hit and, though not shown above, it also went up a lot farther and faster percentage-wise than the other segments.

   At NO POINT in this cycle has the Boston high end dropped further year over year than it did in the down cycle of 1989-1991. The biggest year over year drop in the high tier for this cycle so far was -5.1% for Jan 07 v Jan 08. In the last cycle the drop got as bad as -12% YOY. Additionally in the last cycle the high tier and low tier pricing change and absolute value graph trajectories matched each exactly. In this they show different shapes and amplitudes on the way up and down.

   If I got paid to do this I could do it for every city and someone should! I suspect one would find subtle but important variations withing markets and between markets that are lost in the screaming headlines “HOUSE PRICES DROP 17% YEAR OVER YEAR.”

   I am completely frustrated with the illiteracy of the press and it’s contribution to the fear factor in the market. The press is also lazy, it takes S&P’s monthly press release and just puts it out as a summary story with a big fat scary headline. Scary headlines make for good print and even better politics - “Be very scared because only I can save you.” It also generates reams of free publicity for Zillow, Trulia, Case Shiller/S&P, RealtyTrac and others. All of the actors in the system have skewed incentives to play up the bad news. Additionally most of the actors in this system live in places that are being hit hard by the real estate downturn - California, now Seattle, soon New York City so they live in an echo chamber. However it does a complete disservice both to the economy and to the general public to not look further into concrete data and the differing results.

   Again, anyone with more than a passing interest should look up Karl Case’s paper. You can find it on the Brookings Institution web site or through Google.

   Finally, to go back to a couple of old saws:
   - “all real estate is local”
   - “if you’re going to buy a house plan on staying in it for seven years”: to which I add “and in the meantime enjoy the imputed rent from the roof over your head and maybe look forward to a bit of appreciation.”
   For Boston at least, those in the high end can indeed say, at least until October’s spike in fear factor, that indeed they think their house will be worth more in six months than it is now. In the meantime they can continue to enjoy its use and RELAX and turn their attention to tending their stock/bond portfolio to position it for the recovery which is coming and will ride in on the back of a housing market that is, underneath all the angst, repairing itself.

4. My house has still got to be worth… | Commodity on October 29, 2008 11:15 pm

   [...] a new poll up at the Zillow blog where homeowners all across the U.S. were asked what they think happened to [...]

5. joe on October 30, 2008 12:01 pm

   Los Angeles prices are in DENIAL.
   they should have NEVER gone up 400% in the FIRST place! And of course all you owners/sellers commenting dont want to hear the truth. i understand

   A 2 bed room shack from the 1900s for a million?
   dream on…
   keep living in your house for life then… or sell at 2000 prices if you want to move it. but the fantasy is over my dears…. the VALUE of the home in Lost Angeles is ridiculously over valued. and the ride is over…

6. nick on October 30, 2008 12:25 pm

   Los Angeles goes from the desert to cruddy downtown with few cites that are nice, the bubble for these so-so locations have killed the more refined areas.
   But in contrast , pocket areas with low inventory
   which typically are sought after if you are seeing a 20%-30% drop and you look at rents vs buying buying for the family that needs good school district and
   safety then it looks like a heck of a deal.

   In real estate always the location is 1st and as the
   people still flock to ca and la mainly it will be
   harder to find these kinds of deals at reo prices unless it is distressed or out in th boonies.

7. Bruce on October 30, 2008 12:27 pm

   Interesting summary. I hope the upcoming report includes a lot more detail. I’m in the Northeast in the Rochester NY area and I have to say that values in my area, especially in the suburbs seem to be very stable. Our market has always been described as a ‘Steady Eddie’. Generally, whether we like it or not, real estate appreciates around 2% every year in good times and bad.

   Last weekend, the local newspaper reported that the median home price has dropped for our county from $133,000 to $132,000. I believe this ‘decrease’ is from a drastic slow down in new construction in 2008, which has skewed the median down. If there are a lot less new, more expensive, houses built and the median trends down less than 1%, I suspect that the underlying data would reflect a price increase for sales of existing, owner occupied homes.

   When Zillow asks existing homeowners for opinions about their homes, lets not forget that aggregated data includes owner occupants, investors and builders. I certainly hope that Zillow is not trying to compare opinions from one group with data from all groups.

   Finally, I have always enjoyed Zillow’s attempts to determine the value of my houses on a monthly basis. In our ‘Steady Eddie’ market I have to smile every time Zillow changes the value of one of my properties. The swings up and down make my properties look like stocks, which they are not. For example, I bought a house this Spring that Zillow valued at $128,000. I spent the Summer fixing it and Zillow must have had spies on the street as the value increased to $145,000 within a few short months. The house went under contract quickly for 140,000, the same time that Zillow changed the value to 148,000. Now we are 2 months later and Zillow estimates the house at 142,000. With wildly fluctuating Zestimates like these, the homeowners surveyed for this report may have been correct. It seems the price of my houses are always fluctuating wildly up one month and down the next…at least they are according to Zillow.

8. Debbie on October 30, 2008 12:32 pm

   This was the wrong time to send this out with a more or less “implied” endorsement of John McCain. I want information based on housing, not your or any one else’s opinion on who can fix this. That I have my own opinion on.

   Having said that, EVERYONE GO OUT AND VOTE!! It’s your duty. I don’t care who you vote for just be American and make your voice heard!!

9. Amy B (from Zillow) on October 30, 2008 12:43 pm

   Debbie - I’m sorry you interpreted the survey this way, this was in no way an endorsement of either candidate. This was an independent survey, conducted by Harris Interactive, which reports the responses of 2,000+ adults, of whom 1,388 own homes. That said, I completely agree with you that everyone should vote!

   Other commenters — completely hear you on the “real estate is local” discussion. Zillow’s Q3 Real Estate Market Reports come out on Nov 12, and track home value changes, negative equity and foreclosure data for 165 individual markets, and within these markets, drill down to the ZIP and neighborhood levels with data. Any homeowner trying to get a sense of his or her local market should be reviewing local stats, not the national numbers at large. We’ll be talking about the report findings here, and I look forward to your comments.

10. DebtFree on October 30, 2008 1:07 pm

    GregC, your “peak to trough” numbers today have little meaning until we actually hit the bottom of the trough in 2011 (or later).

    Lower tier homes are popular because they’re the only homes that most incomes can support, now that the funny money toxic mortgages have disappeared.

    And it doesn’t matter if owners don’t intend to sell, the drop in values indeed effects them today as their HELOCs are pulled, or ARMs adjust skyward and refinancing becomes impossible due to lower appraisal values.

    Add in forced sales (death, retirement, divorce, etc) and the price declines will continue unabated as new comps continue to roll in around them.

    The simple fact is salaries have not increased 100% to 300% in the last few years, yet home prices have. The bubble was supported by toxic loans, and those are gone, as are many of the companies who sold and “invested” in them.

    That leaves us at today, where now actual salaries must support prices. Good luck getting anything near 2005-era prices without toxic financing, and mindless lemming-like buyer frenzy, in play.

    Welcome to the new reality.

11. Jay Hufnagel on October 30, 2008 1:16 pm

    I’m a Real Estate Agent in the Southeast for Lake property. Most homeowners I speak to agree that property has declined in value …that is until “they” decide to sell. Most want to list their homes at higher then market prices and hope that someone will at least make an offer. It just doesn’t happen. At least not enough to make “chasing the market” worth while. Scott Murphy, an Appraiser near Atlanta, said that homes are appriasing near 2005 prices. It’s time to get real!

    By Jay Hufnagel, Keller Williams Realty.

12. When the Lake Wobegon Effect Extends to Our Homes | Zillow® Blog on October 30, 2008 1:22 pm

    [...] in which half of homeowners said their own homes were increasing in value or staying the same, we were surprised. According to our Q3 Real Estate Market Reports (to be released out Nov. 12), 74 percent of homes [...]

13. Ken Spengel on October 30, 2008 1:25 pm

    The problem with a Zillow estimate as with all automated reports is not factoring in boundries of subdivisions or areas adjacent to one another. If you are bordered by a subdivision of lessor value and there has been more activity in that area your value will decline. The oposite can be true if the higher end area has more activity producing higher comparables. The computer can not see the differences. There are many factors to an accurate comparison. Non of them can be done from cyberspace.

14. GregC on October 30, 2008 1:38 pm

    Regarding my numbers. Perhaps I should label that Peak to Current which would be more accurate. For the area I watch, Boston high “tier” as defined by Case Shiller index tiers prices have steadied for the past five months through and including August. Mid tiers home price curve is beginning to flatten over the same period and the slope of the “low” tier homes line is also beginning to flatten. All data of course before we were told to PANIC! Also, in Boston MSA at least, if one bought a home in any category prior to 2003, as of August one is still above water price-wise on a nominal basis and in the interim one has earned imputed rent from a roof over one’s head.

    For a truly in depth look at this whole question I can’t recommend strongly enough Professor Karl Case’s paper presented in August at the Brookings Institute: “The Central Role of House Prices in the Housing Crises: How Will the Market Clear.” You can find it using Google.

    Is a bottom here in Boston market? Probably not, is it a lot closer than it was six months ago and will it come well before 2011, yes. But, I’m an ornery contrarian.

15. Mike Satterlee on October 30, 2008 1:40 pm

    “The problem with a Zillow estimate as with all automated reports is not factoring in boundries of subdivisions or areas adjacent to one another.”

    Not so anymore - entire subdivisions are overpriced. That fountain at the entry and wall around the community is no longer doing anything to protect values within these ticky-tack neighborhoods:).

16. Gale Gough on October 30, 2008 1:44 pm

    Greed was the main motivating factor for the housing boom in the 90’s. Real estate agents kept pushing the envelope, and the public went along with it. Now that houses are being sold for what they are really worth, people are frustrated. Also, not everyone in the universe needs to own a home, period. Simple rule? If you can’t afford a house, don’t buy it.

    Additionally, the US has sent most of its manufacturing overseas, which is a dangerous thing to do, because now our national economy is based on foreign imports and we have nothing to export, except houses. We need to bring manufacturing back into the US and not make the housing industry our sole revenue stream. It’s like investing in sector stocks; it’s a dangerous game when the bubble bursts.

17. Survey Suggests Seller Pricing Contributing to Market Slowdown « Seattle Condo Blog | Active Condos for Sale | Downtown Market Trends on October 30, 2008 1:56 pm

    [...] Read the rest of this article. [...]

18. Joanie Miller on October 30, 2008 2:21 pm

    Interesting stuff.

19. DebtFree on October 30, 2008 2:43 pm

    GregC, note that in August firms such as Lehman Brothers and Merrill Lynch were still in business.

    Numbers 2-3 months old (perhaps even 1 month old) are near worthless in today’s environment. Most people are finally starting to understand that things will get much worse, and the price declines will continue for years to come.

    We weren’t “told” to panic, the man behind the curtain was simply revealed (see failures of Lehman, Merrill, AIG, Wachovia, etc). Did you complain about media coverage when home prices were rising at absurd rates?

    Fantasy Bubble Prices were not supported by salaries — it’s that simple.

20. GregC on October 30, 2008 2:51 pm

    Um, DebtFree, ok, you’re da man and you know all.

21. Orlando Real Estate Pro on October 30, 2008 2:53 pm

    There’s no doubt that this is the case - but it’s hardly surprising in many respects. The question is do they really believe their homes are worth more - or are they just posturing to take the smallest possible hit? In any case, at least they are talking the market “up”. Someone has to!

22. David on October 30, 2008 2:57 pm

    Breaking News!!

    Everyone knows Zillow is a worthless search engine that isn’t able to correctly identify values or tends in localized markets… Funny now how Zillow is essentially making fun of everyone it has been trying to “serve”. Zillow is wrong on nearly everything they surmise, so it’s not difficult to assume they’re wrong this time as well. I would guess that the estimates they came up with aren’t all that far off, it’s the 70%+ number in the study they’re spewing that’s probably wrong. Remember, a house is like a stock. There’s no loss until redemption. As long as you own your home and stay put, you’re not losing any money. The only loss occurs if you sell. The sunny reality is that in most markets, if you bought pre 2004, your home is probably worth more than you paid for it.

23. REALonomics on October 30, 2008 3:00 pm

    The Zillow analysis is completely on track. One additional fact we have discovered is the manner in which the real estate industry continues to perpetuate the mis-information about property values by asking us all to “think positively” and send out messages to counter the media’s negative reporting.

    No amount of hype, clever PR campaign or support by NAR of the so-called $700 billion rescue package will cure bad economic models.

    At some point the reality will need to filter into the attitudes, deeds and words of real estate professionals who are continuing to list properties that they cannot sell, further exacerbating the national problem.

    Zillow is to be commended for a unique analysis of what many know intuitively to be true.

    -REALonomics
    http://www.REALonomics.net

24. Yvonne Moretti on October 30, 2008 3:08 pm

    I believe we the public, should insist that Zillow include “an opt out button” on their site for those of us who “do not want our properties” included in their outrageous inaccurate “zestimates”. After all, they are using “images” of “our properties” without permission.

25. Article/Survey Shows Real Estate Sellers STILL Unrealistic « Smoke Signals - Brent Garcia - The Mario Greco Group on October 30, 2008 3:37 pm

    [...] Zillow Survey - In this one, what real estate sellers are suffering from is a brutal case of “Everyone-else-but-not-me”-itis. “The market is bad, the neighborhood is ticking down, I have friends who are selling at a loss, but MY place is immune to all of that,” you can hear in their brains. Time to wake up and smell the reality - your place is NOT immune. The “Go-Go Days” (as my friend calls the period of 2000-2006 in Chicago) are OVAH! [...]

26. sam gabe on October 30, 2008 3:46 pm

    Time for some here to get REAL. Real estate is local, and NAR has been reminding us all of that for a couple years, now. Zillow may be fine for comparing county-wide statistics but they don’t have the local data. If you want to know what the local housing trends really are on a town by town basis you should subscribe to RealtyMarketUpdate.com or one of the other housing market trend analysis providers. Or ask your Realtor (R) to send you the data.

27. Odinstyr on October 30, 2008 3:50 pm

    Agents, appraisers and the media are not bothering to mention the effect that the foreclosures and short sales are having on market comparables. When the purchase price is less than the replacement cost of a property due to the market comps they will adjust, it is just a matter of time. Today, however what you have is a good deal, buy it!

    Having said that, there are those that will warn everyone about how bad the market is and that the market is dangerous. Years from now these are the same people that will say that they wish they would have purchased when the market had hit bottom. Well you do know now what they will wish they knew back then. It is simply this “buy low sell high!”

    And if you are scared to buy a house in this market I have a lovely little 3 bedroom 2 Bath home I’ll rent you.

28. “Denial ain’t just a river in Egypt” — Mark Twain « Boulder Fresh on October 30, 2008 3:55 pm

    [...] October 31, 2008 · No Comments America is in one of the worst housing crisis in history, yet 49% of U.S. homeowners believe their home’s value has increased or stayed the same over the past year, according to Zillow’s Q3 Homeowner Confidence Survey. [...]

29. Socal Underwater on October 30, 2008 4:40 pm

    ”Real estate is local, and NAR has been reminding us all of that for a couple years, now”

    Yeah just like they reminded us over and over that the bottom is soon near. LOL.

    ”Or ask your Realtor (R) to send you the data”

    That’s about as unREAListic as you can get. What a tool.

30. New Feature in the Local Newspaper on New Notre Dame Condos Coming Soon | South Bend Area Real Estate Blog on October 30, 2008 5:08 pm

    [...] optimistic that their project will shrug off the larger economy and be a success. That would mirror a recent survey by online real estate web-site Zillow which reported that many homeowners believe that housing prices are down but their personal house [...]

31. Doug Lawrence on October 30, 2008 5:08 pm

    We kept reading about it in the papers for several years, pre-2006; “When will the bubble burst?” However, greed of the lying borrowers, real estate agents and mortgage bankers/brokers who pushed the exotic loan products are all at fault in this mess. In California, you must have a Real Estate Brokers license to be a mortgage broker. Hence, the buyer walked thru the front door of the real estate office, made their purchase offer with the agent, then the agent escorted them either to the back of the office where the unknowing buyer saw another licensee who offered them the loan with the monthly payment they wanted or else took them up the street to their favorite lender. Wall street bought the products from the lenders and walla, here we are. History repeats itself. In the 1980’s, it was the Savings & Loan crisis. This 700 billion dollar bailout will be the beginning of the next calamity, which will probably bankrupt our economy. We will see in the future, who got their hands dirty in this bailout, and when we do, we will see what it does to the markets at that time(stocks, bonds and real estate). It is always easier to look in the rear view mirror and see what mistakes were made. We are a free market economy no more, thanks to ‘interventionists’ who tell scary tales to the public. People who had no business buying homes, should be foreclosed on, and the real estate agents that walked them in to those crazy loans deserve a slow market, and the mortgage brokers who made those scandalous loans deserve to be out of business, and the wall street boys and girls, including those at Freddie and Fannie deserve to lose their jobs. Recessions historically are good for the economy and are needed to maintain a balance. Unfortunatly, the greed factor as well as people not reading their loan documents (does anybody ever do that?), contributed to this mess. However, the cost of housing materials and labor and land costs will in the long run increase the old homesteads value. It is better to get one when you are young and healthy, rather than try when you are old and sick so that when you are old and sick, you hopefully will have it paid for. This is America. BUY IN A BUYER’S MARKET AND SELL IN A SELLER’S MARKET!!!!!!! Right now is opportunity time and more money is made in a recession than when the economy is booming. All of the pent up demand from buyers waiting on the sidelines for the recovery to begin, will come out of the woodwork, begin then to buy homes, which will start the appreciation again, and walla, you then have a seller’s market again. With the home builders slowing way down; the basic law of supply and demand will dictate the price. And, whoever gets in to office can not change the tax laws. It is the congress who passes the laws, so sit back, be patient, continue with your tax write offs, invest in FDIC insured CD’s and soon you will look over your shoulder and say “I am glad we are out of the recession”. This too will pass!!!!!!!!!!!!

32. Are Homeowners in Denial? « Santa Cruz Real Estate News, Stats, Local Info and Events on October 30, 2008 5:37 pm

    [...] 30, 2008 by Carol VanAusdal Check out this article I just received from our friends at [...]

33. a j sessa on October 30, 2008 6:14 pm

    after 38 years in this crazy worl of real estate i never ceased to be amased how things continue to change but still remain the same.its a 10 year cycle 5 up 5 down and the banks keep making the same stupid mistakes only this time its the largest one of all. be calm stay cool and keep your powder dry tony age 85 and still working A J Sessa ABR

34. Zillow Homeowners Survey Released « Las Vegas Real Estate | Summerlin Homes | Green Valley Real Estate on October 30, 2008 10:36 pm

    [...] to the Homeowners Survey and the whole point of this blog post which you can read by CLICKING HERE. Zillow has been doing these interesting surveys which are not based on numbers their computers [...]

35. Cheryl Hanron on October 31, 2008 12:28 am

    In answer to Doug Lawrence, October 30, 2008
    As a Real Estate Agent for 22 years in California and Arizona in new home subdivision sales working for developers and in the resale market, I have to defend Real Estate Agents and Mortgage Brokers and Buyers. As a New Home Sales Agent, we were under constant pressure by the developers to Sell, Sell, Sell before they (developers) raised the prices again and again, which they (developers) were doing on a weekly basis! I shook my head many, many times in sales meeting wondering how buyers were able to afford the prices? At the peak of prices in California, only 18% of working populas could afford to buy a home! Lo and behold the Lenders came up with “creative ways to get the buyers qualified” with the low interest “starter rates”. The thinking was that the property was worth so much that the risk was small and buyers would refinance later. Real Estate Agents had nothing to do with the prices of the homes. Comparable Market Analysis (CMA) of sold homes were dictating pricing of homes. Mortgage Brokers had nothing to do with the prices of homes. They were responding to the market and offering Mortgage products Lenders were offering to them! Again, in response to the market. How did the prices of homes in California get so high? They were artifically pushed up by DEVELOPERS (Builders of New Homes)They were advertising and pumping up the market for Real Estate and building in a frenzy. Lenders on Wall Street packaged up mortgages into securities and sold them to the clamoring overseas markets who could not wait to get their hands on them.
    During all of this, The (CAR) California Association of Realtors was reporting on the numbers and percentages and putting out newsletters regarding the low percentage of buyers out there who could afford to buy, however, I never read any warning from them at all about “the bubble bursting”
    Anyone who came up with this question was highly critized for putting out “Gloom and Doom”
    The “Greed” started with the Developers and like a pebble in a pond…….

36. Jan Manz on October 31, 2008 1:01 am

    Right on, Cheryl. Market forces set prices not real estate agents. However, in this case I agree with you. It was the developers. We went through the same thing in Phoenix with people waiting outside sales offices at 6 a.m. to sign up for lotteries and hoping they would be picked for a lot. Every day developers were increasing prices, and the more they did it, the longer the lines got.

    One commentary above said they can’t change the tax laws. . .just wait and see. You won’t know this country in two years. BHO has congress in his pocket and the second spawn of hell as his secretary of state. He’s getting away without a valid birth certificate which is mandated in our constitution. Say goodbye, America, you’ve just been overthrown!

    Ever hear this story. . .

    “If you throw a frog into a pot of boiling water, he’ll jump out. But if you place a frog into a pot of lukewarm water and slowly turn up the heat, it will boil to death.”

    My best to all. . .I will send you Christmas cards from British Columbia.

    Jan

    “The individual is handicapped by coming face to face with a conspiracy so monstrous he cannot believe it exists.”

    “Behind the ostensible government sits enthroned an invisible government owing NO allegiance and acknowledging NO responsibility to the people.” - Theodore Roosevelt, 1906

37. sam gabe on October 31, 2008 5:10 am

    I guess I have to agree with Jan Manz on something. She’s right when she says “right on, Cheryl.” But where I disagree with Jan & Cheryl is when they say the developers where responsible for driving prices up. Developers react to supply & demand. Prices are set by the market. They’re a function of what people are willing to pay (those Phoenix people waiting outside for lotteries.) If you don’t have a buyer who wants to pay the asking price for the property the seller eventually lowers the price.

    In the case of those underwater, there are a lot of factors. A good percentage of buyers bought more than they could afford, putting from nothing to 5% down. What ever happened to saving in order to put 20% down? Those exotic mortgages where as much an answer to consumer demand as they were to Wall St and Mortgage makers/brokers greed. Owning a home should be the privilege of those who managed wisely, not the pleasure of the Southern California homeowner acting like a speculator when they think prices are going up.

    To answer the question, “Is this optimism (or denial) necessarily a bad thing?” the answer is it is a “necessary” thing. Markets have many influencers, and reality usually lags perception. Clearly, if you look at the tech bubble and bust as an example, you can’t sell tech stocks now at pre-tech bust prices. The same holds for real estate, and anything else.

38. Cindy on October 31, 2008 6:08 am

    Zillow has been out of touch for YEARS. Me suspects their pricing methodology is politically motivated since when the housing boom was going on, housing prices were insanely high feeding the furor. Now that it’s gone bust, you expect us to give houses away for nothing…sorry Zillow - you lost credibility the day your site went up and 3 bedroom ranches in the midwest were “appraised” at $700,000 (my house was one of them). I’m not going to participate in a race to the bottom that only benefits real estate people and bankers.

39. Deanne on October 31, 2008 6:59 am

    I recently had a house listed which Zillow kept changing the value of the home. Someone previously mentioned that this was an issue here. I respect and appreciate Zillows efforts here, but the housing value doesn’t change that fast. It isn’t the stockmarket. Real estate is slow to react and takes longer than a few weeks to change up/down, up/down. We are still seeing declining values in my area of FL, however, it does seem that there are a few more sales w/ the lowering of the prices. Hopefully, this will continue in a trend that people are getting comfortable where the prices are. There are still a lot of unknowns, however I believe it is a good time to purchase. Real estate was never designed to be a “fast buck” like it became 3 yrs. ago. It is an investment, you HAVE to live somewhere….and long term it WILL gain value. One cannot judge real estate value on a short term gain.
    Real estate People and bankers are NOT getting rich on a “race to the bottom” as another put. I was a new agent right at the end of the height of the market, so I “missed” the hoopla. I’m thankful. I love my job and I enjoy working for my clients, fairly and honestly. I’m just the messenger, I don’t “set” the market. Your home is still a good investment, take care of it, live in it, enjoy it, live your life, raise your families, enjoy your community….it WILL work out in time. (this is not to diminish the situation some folks have found themselves in, ok?…but, overall I’m talking big picture)

40. sam gabe on October 31, 2008 7:28 am

    Very well said, Deanne!

41. John Richard Wilson on October 31, 2008 7:37 am

    As a real estate professional, I feel that Zillow is a great resource. I have noticed that Zillow is a little dated, or behind the trends. But it gives homeowners a general idea as to what their home COULD be worth. And you are right, most homeowners think their home is worth more than it actually is.

    Real estate is very localized, every neighborhood is different, and every house is different. I generally represent sellers, so when I speak to someone who is considering selling, I have already done a comparative market analysis (CMA) for their home. Zillow gives a another point of reference and another resource in this analysis. In the end, it boils down to Price vs. Condition when comparing to other competitive houses and what someone is willing to pay. You can sell a house next to a landfill if it is priced right. There is no substitute for a good knowledgable real estate agent in determining the best estimate of value for a home.

42. Rick Goates on October 31, 2008 7:39 am

    Interesting…I agree with the one statement above about the value of some homeowners has not changed “To them” or something like that….There are still many that think my property is worth X….and with that guess what??? You get to keep it for that price….it’s yours!!
    But I want to sell it dear Realtor! Well then you have to price it correctly where BUYERS will get interested in it!!! NOT where you feel it is worth!!

    Theory and Reality^^^

    Theory says my home is the best and therefore the most expensive in the neighborhood…
    Reality says that your home is no better than the other 2000 out there for sale in any city across America and if you want to SELL then you had better start caring about what the BUYERS WILL PAY and not what you feel it is worth….or you get to keep it for YOUR price!

43. Odinstyr on October 31, 2008 8:02 am

    The only true value of a home is indicated when a willing buyer meets a willing seller. The average home buyer tends to buy from an emotional stand point and then they see if the price is something that they can afford. True, the buyers look at price but it not the only factor why they purchase a home. If every home buyer only looked at price we would all be investors.

    The media sells more papers and gets higher ratings during a crisis. I still see homes being sold, built and being refurbished. The market is still moving and is affected in large part to media coverage. There are some adjustments going on but the sky is not falling. Based on marketing statistics driving the doom and gloom reporting you can see how the media would be motivated to embelish market down turns. So in the end to see the true picture you just have to do the math. Problem is, nobody does the math.

44. Presidential Politics and the Value of My Home | Zillow® Blog on October 31, 2008 8:16 am

    [...] I mentioned in an earlier post, a few weeks ago we fielded Zillow’s Q3 Homeowner Confidence Survey in the midst of Wall [...]

45. Brian Pothier on October 31, 2008 8:53 am

    Being involved in the marketing and sale of real estate on Cape Cod for almost twenty years this is not the first downturn in values. Looking back on the late 80’s anybody that purchased property on Cape Cod then still looks fantastic today.

    I think the press has spent to much time on the bad markets and declining values and not much if any on the good markets or stable values. Cape Cod has not seen the price declines of other areas and most likely will not. 2008-2009 is an opportunity market and not everyone has a subprime mortgage

46. John Richard Wilson on October 31, 2008 9:01 am

    One of the comments above hit the nail on the head. Pricing a home correctly is the determining factor as to whether a home sells. It does not matter what YOU feel your home is worth it’s what the BUYER is willing to pay. If you’re not willing to price it to sell, you should take it off the market and wait until the price increases…..whenever (if) that happens. No amount of advertising, marketing or sales skill is going to make a house worth more than it is. Once again, it boils down to value. Price & condition (assuming that you have exposure to the market and motivated buyers). The market is not bad, just different. Homes that are priced correctly still sell…incorrectly priced homes don’t.

47. Zillow: Some Homeowners Still Fooling Themselves | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area. on October 31, 2008 9:04 am

    [...] Zillow’s latest Homeowner Confidence Survey is at least worth a brief mention. According to the third quarter update, only 65% of homeowners in the West believe that their home declined in value over the last year, while in reality 85% of homes experienced falling prices. Read Zillow’s own blog post about the report here. [...]

48. Odinstyr on October 31, 2008 9:37 am

    65% of while 85% blah, blah, blah. So what! 69% of us think the statistics are only 40 to 50% accurate at best. I think that 30 to 60% of the findings are bias anyway. So I can only depend on a 20 to 35% accuracy rate of the blah, blah, blah. The numbers can reflect anything you want by asking different questions. This goes to show you that 86% of statistical data is made up anyway.

49. John Richard Wilson on October 31, 2008 10:11 am

    Deanne’s thoughts concerning Zillow’s quickly changing value assessment on a house she recently listed is incorrect…IF you want to sell the house. The market values of most houses ARE constantly changing. Every time a home is sold, or fails to sell in a given area, it affects value of other homes around it. Additionally, outside factors beyond our control can instantly have an impact.I work in Charleston, SC, a more stable market than most, but eventually, it boils down to what a buyer is willing to pay and what a seller is willing to accept. If it’s your home, and you don’t need to sell, you can put any value on it that you want and simply keep it. But, when you DO need to sell, it’s the combination of price & condition and competitiveness that will get it sold. Housing IS a long-term investment…but in a lot of ways like the stock market. Stocks can be day-traded or kept as long-term investments, so can houses, but that market is not now. We are in a “bear market” as far a housing (and the stock market) is concerned….it’s a buy opportunity!! Buy & hold!!

50. Bob Wood on October 31, 2008 10:17 am

    Here in Northern Virginia, there are strong signs that the market may be turning. A few months ago, The Washington Post described Prince William County as part of a “ring of fire” around the DC Metro area of more than 1500 foreclosures that had taken place at the time primarily in Prince William, western Fairfax and Loudon counties.

    Last month in Prince William, though this of course has not been reported in The Post, more than 500 home were either sold or went under contract according to our local MLS. This only happened after homes in Prince William began being offered at prices that had not been seen since 2002-2003. The sad thing is that had many of the sellers of these homes, which now includes banks, priced them realistically to begin with, they probably would not have stayed on the market for as long as many did, would most likely have sold for more than they ultimately. Sellers though, whether individuals or institutions, want what they want, usually on price their homes accordingly and can almost always find an agent who is willing to “buy” the listing by going along with overpricing in hopes that maybe somehow their overpriced listing will sell or the owners will lower the price before they withdraw their listing and “sell” it to another compliant agent or it expires.

    The ultimate result of all this is even further price erosion.

51. John Richard Wilson on October 31, 2008 10:37 am

    Right, the first 3 weeks is the “Golden Period” when 80% of buyers have the opportunity to see a home. If you price it too high, you just chase the market down and pass the point where it would have sold had you priced it correctly originally. In a slow market I would rather price just below the lowest real comp and be the first to sell.

    The market is (or has) changing for the better. A composite of 138 of the top real estate company executives in a conference late last month felt that we should see a slow recovery in the housing market during the second quarter or by mid-2009. I think we have seen the bottom and by the end of 2008, after the uncertainty of National Election has been resolved we will see a moderate & steady improvement. This week, I am seeing a lot of showing activity for my listings. Almost twice the number of showings as the previous 3 weeks combined. Price it right and it will sell.

52. Portland Oregon Real Estate Agent Blog » Week Links - October 31, 2008 on October 31, 2008 12:14 pm

    [...] U.S. Homeowners in Denial? The delusion isn’t so pronounced in the West, but a recent Zillow survey shows that half of US homeowners are still under the impression that their homes have not lost value. [...]

53. Deanne on October 31, 2008 12:16 pm

    I will restate this…
    the real estate market does NOT react quickly. A house sold in the same market may affect the sales, however, an appraisal is done w/ sales over a series of months (generally 3-6, depending on lender). In that time, there will be a general trend overall, NOT an up and down movement. That is what is meant by declining or inclining values. Your house does not jump by thousands overnight…period. IF it did, a CMA would be useless.
    So, I differ w/ you and the house I just sold held true in the pricing/sales price & appraisal value. The declining market was taken over several months…NOT one or two sales.
    The only time you can put a moving target philosophy to real estate was when the market was “falsely” hot (it was not real money,…most of it was 100% borrowed, and leveraged monies from equities). Then, houses were selling so fast, it was moving…there are not as many houses selling in today’s market, therefore it does NOT fluctuate up & down by great amounts.
    I have a background in history, business, stats & financing. You can play w/ numbers to make them look a certain way you want, but the “history” is what determines the trend…not what you want it to be or one house in the neighborhood sold…there are a lot of factors that make that house comparable in order to compare it.
    It is NOT a simple process and though guidelines are good…computer programs do not factor everything in, nor can they…hence, I state again…house value does NOT fluctuate in the short term in this market. People thought that the market was hot in 2006, when the peak had already been reached in 05. It is now 08 & it is still adjusting, though hopefully at a slower rate.
    Sales are increasing slightly which if holds the trend will show that people are more comfortable w/ the price….as they are showing today.

54. John Richard Wilson on October 31, 2008 12:59 pm

    I did not mean to deminish the information you offered or minimize your expertise. You made some very good points. However, the market does fluctuate with sales. I do list and sell a lot of houses. An appraiser is supposed to go back only 6 months, and now if possible only 3 to find comps. If you had 3 recent sales for similar houses , an appraiser would use those (and so would any agent when doing a CMA when helping a buyer with an offer). I certainly would not pay more for a house than what recent sales dictated. I really am not all that interested in the current list price, other than if it in line with recent sales (or if condition or features justify a higher price). That makes a CMA extremely valuable rather than to the contrary. Lots of work and judgement goes into a CMS picking the right comps and comparing them. I am sure Zillow’s fluctuating price evaluation was based on recent sales and features of the home compared to others. Once again, real estate is very localized and Zillow is just a guide. I do find their information to be just a little dated.

55. DebtFree on October 31, 2008 1:10 pm

    Lots of denial right here in the comments.

    As for the value of the information Zillow provides, note that Zillow provides several types of data:

    1) Sold transaction price history.

    2) Satellite photos.

    3) Property information (taxes, when it was built, etc).

    4) “Zestimates”.

    Of these pieces of information, the first three are indisputable in their value. The fourth, Zestimates, are more of a novelty in my experience, but may be more useful in homogeneous communities built within 1-2 years where the homes are mostly similar in size, age, and amenities.

    For older areas, where homes are very different, and built decades apart, Zestimates are almost useless.

    But don’t throw out the baby with the bathwater, utilize the first 3 pieces of data Zillow provides!

56. Deanne on October 31, 2008 1:13 pm

    We may have been actually speaking to two different issues of the main topic. What I interpreted was this: Zillow at times shows house values going up & down dramatically in a short period of time. My point is that they do not move dramatically in a short time. Real estate does not move like the stock market. I agree w/ you on all the appraisal points, the sales, etc. totally.
    What I’m saying is that when a seller is watching Zillow, they comment things like, “I see my house just increased a little in value”. Well, I can assure you it didn’t increase or decrease enough that the price should change or that your current contract is at a wrong price. It just doesn’t fluctuate that much…a few thousand is one thing. I can draw on comps w/in a subdivision w/o going out for a mile or two….which can involve a definite difference in pricing….
    I don’t think we are in too much disagreement, but maybe in writing, I’m not expressing myself clearly…
    who knows…
    but, overall, real estate does not fluctuate up and down daily in a value of the home but by a small amount.

57. John Richard Wilson on October 31, 2008 1:40 pm

    You’re correct.

58. GregC on October 31, 2008 2:07 pm

    For many owners who bought prior to 2003, got a decent fixed rate mortgage, have an income appropriate to their debt level, and plan on staying in their home their house hasn’t lost it’s value TO THEM. It yields the same imputed rent to they and their family of a roof over their heads that it has since the day they moved in. Sure, if they had to sell tomorrow they’d get less than they would have in the middle of 2005, sure some know that others don’t, so what?

    Also, I’m looking at a chart of Case Shiller pricing data for the Case Shiller “high tier” for every city they track this data for. For many of these cities, as of August (yes, before the world came unglued supposedly) the drop in prices had stopped - for this tier.

    Cities with a flattening, flat or up trend in pricing:
    - Cleveland
    - Boston
    - Minneapolis
    - Atlanta
    - Denver
    - NY and suburbs
    - Washington, DC area
    - San Fran

    Cities still dropping:
    - Phoenix
    - LA (though flattening noticeably)
    - San Diego
    - Las Vegas
    - Miami

    The cities whose curves are flattening also have dramatically lower peaks as well.

    This is only one segment of the market - and the price definition of that segment varies a lot between citires - but some of the stories on here seem to anecdotally confirm some of this. For Boston I just had a conversation with someone today who bought a high end property in the past few weeks in Cambridge, MA and prices there have not only firmed but turned up again substantially.

    Yes, the world’s coming to an end and layoffs are all over the news and no one will ever get credit again and right minded people would be stashing gold coins in their worthless properties back yards and buying chicken and goats. But, this viewer will be watching with interest whether these trends confirm over the next few months or change substantially and if additional cities move from one list to the other or vice versa.

59. Odinstyr on October 31, 2008 2:19 pm

    Isn’t it true that the percentage of home owners still paying the mortgage on time is in the mid 90% range?

60. The Capital Hill » Blog Archive » Another Zillow update on October 31, 2008 2:46 pm

    [...] From Seattle Bubble: Zillow’s latest Homeowner Confidence Survey is at least worth a brief mention. According to the third quarter update, only 65% of homeowners in the West believe that their home declined in value over the last year, while in reality 85% of homes experienced falling prices. Read Zillow’s own blog post about the report here. [...]

61. Sick Of Your Agent Talking About a Price Reduction? | Why Didnt My Home Sell on October 31, 2008 3:13 pm

    [...] recently posted a fabulous article and the results of their Quarter 3 Homeowner Confidence Survey asking consumers their perception of [...]

62. lori on October 31, 2008 4:45 pm

    As an agent, I only have a Zillow account so I can correct the ridiculous information that it has in their on my listings. It has my personal home value grossly off, has me in a different town, school district, etc. Had my last listing in a different zip code and school district. I just go in and make corrections since I don’t want my clients thinking that I loaded in the incorrect info. I don’t know where they get their info, it’s not drawn from any info on other sites because I maintain those and rarely see errors. Zillow has got to be the worst. It has my entire neighborhood in different and wrong school districts and has grouped some single family homes together in a ‘building’ like a commercial property. ugh.

63. Paul Francis, CRS on October 31, 2008 7:19 pm

    Sorry.. I’m just kind of curious after reading the comments
    what a survey of homeowners has to do with zestimates, new
    home builders playing the perfect fiddle or statistical
    anything else for that matter?

    Blame whoever but this blog post was about a survey performed
    by Zillow… nothing more.. nothing less.

    I found the survey interesting myself. Opinions concerning
    anything else I’m sure could be written on your own blog.

    Sorry… just a thought after reading the comments.

64. Kenmore Undressed » Blog Archive » Delusion Comes in Many Forms: Facing Facts Can Be Difficult on November 1, 2008 12:05 am

    [...] findings regarding home owner expectations in the current market. Zillow indicated in their Homeowner Confidence Survey that there exists a perception-reality gap. Quote: “Despite the turbulent quarter, half of U.S [...]

65. lori on November 1, 2008 4:12 pm

    Because the sellers filling out the surveys are missinformed and relying on Zillow and other sites for correct information. I am thinking that a lot of sellers are taking the information they find on these sites and getting a picture in their head of what their home is worth. If the info is not accurate, the real estate professionals are facing an uphill battle on getting the pricing right. You have a point, though. My gripe with their errors could have gone on under a different subject.

66. Cheryl Hanron on November 1, 2008 9:17 pm

    As an Agent the Zillow survey result is not surprising to me. People are very emotional about their homes. Whether buying or selling. It is a very difficult thing to communicate “Market Value” to a homeowner wanting to sell. Even in the face of “reality” in the form of CMA’s, denial is very strong. A person’s identity is tied up in their home and thus it’s “Market Value” is correlated to their value as a human being. You can give them numbers all day long and they still want to try for the higher price. In the old days, there was usually negoiating room of $10K or so. This has changed considerably.
    Zillow does offer “zestimates” that can be manipulated, however, it does not offer enough variables for a given location or community, or what a particular community may value more than another. i.e. trees. In California, a home on a lot with a number of trees is worth more than one without. Views are another catagory not provided for in “Zestimates”. Gated communities, resort style communities with golf courses, etc, are not provided for. School districts are valued differently.
    Zillow Homes are simply compared with others of the same sf. Zillow can never replace a good agents CMA or an on site appraisal.
    A note on my prior post regarding Developers. A good Developer hires good Marketing people who “create” the market. Media can help or hurt our market. Newspapers, TV and Advertising is very powerful in shaping perception. Today’s media is loosing readership due to negative opinions being written rather than subjective news coverage. We have for the first time in our lives, stopped delivery of 2 Newspapers due to the negative coverage. More people need to get the message to Media to upgrade coverage. Then, we will start to see positive recovery.

67. haberiks on November 2, 2008 8:00 am

    Hi zillwblog. I am Haberiks

68. Carnival of Real Estate | Minnesota Investment Property Blog on November 2, 2008 10:54 pm

    [...] Even after all the doom and gloom you hear on television these days about the housing market, it was amazing to have Amy Bohutinsky at the Zillow blog tell us that 32% of the people they surveyed still believed their house when up in value over the last 12 months!  Amy gets the Speaker of the House Award as she explains Strangely, “Not My House” Sentiment Continues, Albeit a Smaller Group. [...]

69. Jerome A. Lesak CSD on November 3, 2008 7:45 am

    From my perspective in Northeast Ohio sellers have the attitude that they don’t want to give the home away. If they have to sell their home it will take some time before reality to hit them. They will fight it tooth and nail. They know there time line or dead line where they will have to make the sale and will not give in until the last possible moment. Some sell if they are lucky and the rest go into foreclosurer. A lot of people around here wait to long rather that facing the market for what it is. In my own family this has happened.
    The other group of sellers that own their home or don’t have to sell feel the same way. I’m not going to give the home away. They will list their homes for 6 months, take if off and then relist. They won’t lower the price.
    The rest of the sellers realize what is going on and take the financial hit. Mostly becuase they have to move or have no choice or family reasons. Some sellers will wait becuase they have negative equity in the home. They will wait for market conditions to improve.
    From the survey taken it would seem sellers feel their homes have value and hold price becuase it really does just to them. The homes do have value, but just not the same value that the market is going thru. It’s like buying a new car and driving it out of the car lot. You’ll never sell it for what you paid no matter what value you place on it.

70. Doug Lawrence on November 3, 2008 7:57 am

    Response to Cheryl Hanron on October 31, 2008

    Cheryl,
    Obviously you were admittedly part of the problem yourself, just as perhaps innocently as I was as an active and continuous real estate licensee in California since 1977; for I am not naive about how our economy got in to this mess nor hwo the real estate markets were operating in California during that time. I stand behind what I wrote, because I was there, I saw it, I lived it and finally got sick and tired of it and saw the bubble getting ready to burst. It was quite obvious, and not attributed to developer; so please Cheryl, let’s be real. The re-sale market was driving upwards; with multiple offers many, many times, which then that cause and subsequent effect caused the greedy builders to follow suit. They were the tail, but the re-sale market was the dog wagging that tail, not the other way around. CAR did have articles, go back and look. It was well publicized across this country.
    You say you defend Real Estate Agents and Mortgage Brokers and Buyers. PLEASE! That is a scary statement. Any agent with any kind of economic sense during that time, would not take out an ARM for themselves let alone advocate one for a buyer without a solid and bona fide exit plan for that borrower/buyer, if they had any moral conscious at all, because with a simple calculator, the agent should, and is mandated ethically in their practise under Agency Laws, to look out for the buyers, which can include the agent simply anticipating the future worse case scenario of the payment increases. And,buyers (both novice and seasoned), caught up in the fervor, like a rookey gambler at the blackjack tables, continued to bet (speculate) and agents/brokers would even tell their buyers, as would the mortgage brokers, “Oh, with this appreciation, we can re-finance you in to a fixed rate mortgage in one or two years”, knowing in their hearts that the people could barely afford the payment on the adjustable rate set much lower than what a future fixed rate would be, at the time they were taking out the initial loan.
    You state that real estate agents had nothing to do with the pricing of homes, yet your next sentence states Comparable Market Analysis (which are prepared by real estate agents) were dictating pricing of homes. Again you are wrong. It was what buyers were willing to pay, and sellers were willing to accept (fair market value); but the oxymoron to this is that the real estate appraisers, in order to keep up with the each ever increasing challenge of justifying the monthly increases of the fair market value of comparable homes, were using an adjustment on their appraisals called a “time adjustment”, to justify the new comparable purchase/sales value, from the appreciation it realized in just one, two or six months (and totally subjective on the appraiser’s part I might add).
    Developers were just a competitive piece of the problem. Cheryl, you can have one years experience twenty two times, or you can have twenty two years of continual experience. Working for a developer is an order taking job and not the real world of what happened. As for me now, as a licensed California broker? I sold out and bailed out in 2005 because I saw what was happening and about to happen, did not like what was happening and moved my entire family to a place of business moral sensibility and responsibility where our values to this day have only softened a bit, to the east side of the Mississippi River.
    No Cheryl, the ‘Greed’ did not start with the developers, it was hungry hound lying buyers, real estate agents/brokers (not all) and mortgage brokers (not all) who were the culprits. After all, who signs their name below the buyer on a purchase contract? ANSWER: The agent/broker. Who signs their name on the loan application after the borrower? ANSWER: The mortgage broker/agent who took the application. Somebody (who is a licensee and thus automatically given the title “PROFESSIONAL”) compared to the amateurish buyer (in most cases) was the ethically responsible party of putting that person in a property over their head. I didn’t even speak about the poor ‘ole buyers who hardly speak or read English, that were duped in, and who are a major percentage of those being foreclosed on now, because the purchase contracts and loan documents are all done in English. It is an AGENCY requirement of representation to look out for the buyer, even if it includes retaining an interpreter to read the documents first for the buyer, before the buyer signs. But, that may have caused some to walk, and thus no commission earned. I understand this whole mess better than you think Ms. Cheryl. I lived it and the pundits saw it coming and spoke about it. You just weren’t reading the local newspapers business sections. CAR is a trade magazine. Those on the ground,like yourself, actively pushing the products were part of the problem as the new deveopments. Yo may have shook your head, but you didn’t give up your job. I could go on, but then my future You Tube seminar and CD book on how people can survive this and recover and get on to owning free and clear real estate would all be revealed. ZILLOW is a service that does not reflect all of the local market conditions, but my dialogue here is the facts as I experienced them, lived them and saw them in what is the biggest hoaz perpetrated on the American Public since Florida swamp land began being sold in the 1950’s, for deveopment; i.e. “Liar Loans” and other exotic loan products were not good, and all involved from Wall Street to Main Street continued to exacerbate what has turned in to the worst financial crisis since the Great Depression.

71. Carnival of Real Estate #115 | Zillow® Blog on November 3, 2008 11:50 am

    [...] Amy Bohutinsky, received the “Speaker of the House Award,” for her post “Not My House.” The award was bestowed by Minnesota Investment Property who hosted the 115th edition of the [...]

72. Paul Francis, CRS on November 3, 2008 1:09 pm

    Jerome makes and excellent statement in his comment:

    “From the survey taken it would seem sellers feel their homes have value and hold price becuase it really does just to them. The homes do have value, but just not the same value that the market is going thru.”

    It’s kind of like trying to value homes with a program. Human emotion is impossible to calculate. As we all should know in residential real estate, the value of a home to three different buyers is going to be three different numbers.

73. Cheryl Hanron on November 3, 2008 3:56 pm

    To Doug Lawrence Nov 3, 2008
    Wow, You sound like an angry, guilty Broker/Developer. Now, you want to cash in and “help” people with CD’s and books!
    Sorry to disappoint you. I personally did not get involved with “pushing” loans and for the reasons you mentioned. The market you describe sounds like the Bay Area. It was exactly what you describe. I watched it from a different market and I did get out, much before you. Well before the insanity of the rookie gambler at blackjack tables with multiple offers etc, etc. I sleep well at night because I did look out for my buyers, much to the irritation of my boss developers. Spare me the insults you big important Broker. How many Agents did you hire that were “Conditional Licenses” They took one class in Real Estate and the State of Calif gave them a License to steal? That has been outlawed in California for your information due to too many law suits. You made your money and bailed out just in time, how convenient for you.
    Please don’t villify those of us with ethics that are still here trying to clean up this mess and deal with the loss mitigation departments to sell homes. The market you were in was of your own choosing and you chose to play the game.

74. Brian Vaillancourt on November 4, 2008 9:25 am

    Very interesting data but way out of date…I am a realtor in North Idaho and Eastern Washington…and find a major problem with you lumping so many states in one group…markets are very different state by state….would be more valid data if you would break down state by state…and update the data quickly to mirror the current economy after the end of the third quarter….

75. Alicia Garatoni : Life after the election. . . on November 10, 2008 9:40 am

    [...] Many believe that uncertain expectations prior to the recent elections kept most buyers on the sidelines, waiting to see ultimately who would be the president elect.  Now that the election is over and people have a better sense of where they believe the economy is heading, we may see an increase in buyer activity.There are several reports published lately that capture the indecision and perceptions on the part of both buyers and sellers.  The first is an interesting survey published by Zillow last week, their Q3 Homeowner Confidence Survey.  Surprisingly, 49% of those homeowner’s surveyed don’t believe their home has decreased in value.  Of those same homeowners, 61% felt that their home value would either stay the same or increase in value in the next 6 months.  Home prices for most metropolitan areas have declined however.  For the full article, go to http://www.zillowblog.com/strangely-not-my-house-sentiment-continues-albeit-a-smaller-group/2008/10/….   [...]

76. Increasing Home Values According to Survey of Home Owners | Home Buying & Selling Guide on November 18, 2008 1:29 pm

    [...] Strangely, “Not My House” Sentiment Continues, Albeit a Smaller Group [...]

77. Mr. Magic Mortgage on November 18, 2008 3:18 pm

    Value is a perception. Of course the value of my home has not diminished. My home is in better condition, has more amenities, and is far superior to those of my neighbors.

    Asking homeowners for their opinion about the worth of their home is like asking them how many more years they will live.

    This fear mongering marketing technique may increase Zillow’s bottomline, however it does nothing to maintain professional decorum. Grandpa always said there are three kinds of liars; liars, damned liars, and Statisticians. Which one is Zillow?

78. Mike Satterlee on November 18, 2008 3:31 pm

    Mr. Magic Mortgage:

    Respectfully - there is fear mongering & there is reality. My guess is your home would not sell today for what you think it’s worth. To your point - if your not selling today then it doesn’t matter TO YOU. However it does matter to those who are in the unfortunate position of having to sell in this market.

79. Mr. Magic Mortgage on November 19, 2008 6:20 pm

    Response To : Mike Satterlee

    The “MY” as used in the original “Mr. Magic Mortgage” post was rhetorical not personal. But, since you ask; I personally have no intention of selling, so the only value of import to me is that assigned for tax purposes. And, that value is gauged by completely different set of rules, as is determining value for insurance purposes.

    You are right about those who have to sell, and that was my point. Those people who expected to sell at true arm’s length “in a competitive and open market under all conditions requisite to a fair sale” are being robbed by fear mongering head lines saying the value of their home is being reduced daily.

    The point is that the value of a home doesn’t occur until a sale is completed, and at that happening is the only time value can be determined. A profit or loss is the result of a sale not a perception or prediction; Sales Price - original cost of acquisition – cost of improvements (not maintenance) - cost of sale = profit (loss). Until settlement of a sale is concluded and money passes hands, all else is pure speculation. Similar to: I “could” get an “A” on my next test if. One won’t know that outcome until the one’s test is graded and handed back.

    To say “the value of ALL homes is falling” is ludicrous. Certainly the value of foreclosed homes is falling but not all homes. To say that some sellers appear to be succumbing to panic and selling for less than sales prices of similar sales recorded a 1 year ago is a correct and proper assessment of the current market.

    Not all sales are comparable, that is why lenders require appraisals in order to help them determine market forces. Appraisals are “an opinion” not “a fact”. Zillow has a right to its opinion, but to purport its opinion as fact is wrong. That practice is not professional and is unbecoming of your company.

    Now to the guy or gal who is in the unfortunate position of “having to sell today”. The undue credence currently given to the foreclosure market should not continue and must not be allowed to impact “normal arms length sales”. Unfortunately some “market players” believe that a foreclosure sale should be viewed as arms length because the “Note Holders” are trying to sell their REOs for what they consider top dollar. Top dollar by Note Holder definition is based upon a BPO done by a licensed affiliate broker with little or no training in the “art of real estate” appraising. So, bad apples, rancid oranges, bruised bananas, rotten grapes and a few California nuts are being allowed to impact the price of steak and potatoes. This has caused Panic and Panic is the monster driving force in any market. Yelling fire in a crowded theater used to be a felony. Now it seems to be justified as “an opinion” and protected under free speech. Just like “corporate transfer” induced sales, foreclosures are classified as “concession sales. Adjustments are made to bring these type sales into line with “arms length market” sales. .

    The definition of value as applied to real estate appraisals. In the US, the most common definition of Market Value is the one promulgated for use in Federally regulated residential mortgage financing:

    “The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

    Applying anything short of this definition is known to cause PANIC. Applying anything long of this definition is known as GREED.

    I respect other opinions. I don’t respect lame justifications for presenting skewed pictures which play on the emotions of people who, by being ill informed, will react in a panic driven mode because a head line yells at them in innuendo that foreclosure sales are normal sales.

    Zillow, as a company and it’s employees and agents, should be more professional and take a higher road. Lenders are selling repossessed homes for cents on the dollar of cost. There is a mountain of legitimate documentation to support the fact that homes are being sold for 10, 15, 20, even 25% less than their original cost to build. That is hard cold fact. Those transfers must not be allowed to be taken into consideration or allowed to negatively impact competitive and open market sales. Simply reporting sales prices without referencing the conditions under which each sale occurred is not indicative of value but an irrelevant number unto itself.

80. GregC on November 19, 2008 6:44 pm

    Mr. Magic Market

    Congratulations for a great post. Zillow’s PR effort riding on the back of general panic is effective but useemly and is aided and abetted by a press corp with little or no financial education or willingness or time to question the statistic they repurpose into scary articles.

    As new builds continue to decrease to record lows and fire sales continue to increase dramatically in the worst hit markets Professor Karl Case’s prediction that this too shall pass eventually and prices will bottom, probably not this year, maybe not next year, but not far after that and it is already happening in areas outside of the worst hit areas.

    Then, assuming Zillow has found a viable business model by then and is still in operation, they can go back to the old fashioned way of generating business, providing value to customers rather than pablum to the press.