Survey: Home Owner Perceptions of Property Value "Overly Cynical"
Zillow,rnthe Seattle-based company that collects data on home values throughout therncountry, has released results of it's homeowner confidence survey conductedrnduring the 4th quarter of 2009. rnZillow found that only 20 percent of the 2200 homeowners surveyed feltrnthat their home's value had increased during 2009 while, based on its own data,rnZillow believes that 28 percent of homes nationally had appreciated in valuernduring the year.
Basedrnon this response, Zillow assigned a negative two score to its Home ValuernMisperception Index where an index value of 0 would mean that homeowner's perceptionsrnwere in line with actual values. Thernoriginal index when the survey was first conducted seven quarters ago was 32. Last quarter the Index was at 10 and one yearrnearlier it was 11. Zillow interprets the current index to mean that homeowners are “overly cynical”rnabout the value of their own homes. rnPerception was most out-of-line with reality in the Northeast where 22rnpercent of respondents felt that their homes had appreciated during the yearrnwhere Zillow's figures put the actual number at 42 percent.
Nationally, exactlyrnone half of respondents felt that their home's value had decreased over thernyear. Zillow's figures put the actualrndecline at 65 percent. On a regionalrnbasis, the Northeast had an actual decline of 49 percent while home owners'rnperceptions were at 46 percent; in the Midwest and the South the actual figurernwas 64 percent, the perceptions were 46 and 49 percent respectively. 73 percent of western homes decreased inrnvalue while 62 percent of respondents felt their own homes had lost value.
Zillow said that the results of it's survey demonstrate the “not myrnhome” sentiment, which was once prominent among American homeowners, hasrnfaded. One year ago, nearly half (47 percent) of homeowners believedrnvalues in their local market would decrease in the next six months. However,rnwhen asked about their own home, fewer than one in three (30 percent) believedrntheir own home's value would decrease. Now that gap has shrunk, with 22 percentrnof homeowners believing their local market will lose value over the next sixrnmonths and 14 percent believing their own home will lose value.
Wherernhomeowners appear to be most out of touch with the reality of the market is inrnthe numbers who felt there had been no change in the value of their homes. Nationally 30 percent felt that there hadrnbeen no change where the reality, according to Zillow, is that prices have beenrnstagnant in only 7 percent of home values. rnThese numbers were remarkably stable across regions – between 26 and 32rnpercent felt there had been no change while the actual figures were 6 to 9rnpercent.
Whenrnasked to look forward, 38 percent of national respondents think their home willrnincrease in value over the next six months; 14 percent think it will decrease,rnand 47 percent see it remaining the same. rnThe percent expecting an increase was virtually identical in everyrnregion.
Thernlarge number of homeowners who view prices as having been stable over the pastrnyear and expect no change in the coming six months make it difficult to assessrnwhether the results show unwarranted optimism or insufficient pessimism. However, Zillow chief economist, Dr. StanrnHumphries, said in a press release, “Homeowners are finally succumbing to the notion that, in mostrnareas, declining home values over the past year are no longer the exception,rnthey are the rule. Almost three times asrnmany people believe their home's value will increase over the next six monthsrnas believe it will decrease in value, a level of optimism that is likely tornoutpace actual performance in the near-term. Given recent news about thernstabilization of home values in some markets, I can see why homeowners are sornoptimistic. However, home values in many markets are still under substantialrndownward pressure from high levels of foreclosures and we don't believe we'llrnsee a definitive bottom nationally until the second quarter of this year.”
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