Survey: Homeowners' Perceptions of Home Values Improve

American homeowners' perceptions of the value of their own homes moved more in line with reality at the end of 2008, at least when it came to hindsight, based on a report released by online real estate marketer ""Zillow"":http://www.zillow.com on Wednesday.
More than half (57 percent) believe their own home lost value during the year, according to the ""Zillow Q4 Homeowner Confidence Survey"":http://zillow.mediaroom.com/index.phpxs=173. This is markedly more than the 38 percent who believed their home's value was declining when asked during the second quarter of 2008.
Based on analysis of its ""Q4 Real Estate Market Reports"":http://www.zillow.com/reports/RealEstateMarketReports.htm, Zillow says that in reality, 76 percent of all U.S. homes lost value in 2008. With these new findings, Zillow's Home Value Misperception Index shrunk to 10 in the fourth quarter, from 16 in the third and 32 in the second quarter. An index of zero would mean homeowners' perceptions were in line with actual values.
Despite the improvement in perception of current property values, when asked what the near future will bring for their homes, most homeowners expressed optimism and appear to believe that the worst may be over. According to Zillow's survey, more than two-thirds (70 percent) of homeowners believe their home's value will either increase or stay the same in the first six months of 2009. Only 30 percent believe it will decrease.
Dr. Stan Humphries, Zillow's VP of data and analytics explained the company's most recent survey results. ""It's clear that the 'not my house' sentiment that was so prevalent in earlier surveys is waning, and homeowners are opening their eyes to the unfortunate reality of significant losses in home values across most of the country,"" Humphries said.
Humphries continued, ""That said, there's a curious optimism for homeowners when asked about the future - most seem to believe we've hit a bottom and the worst has passed. Unfortunately, the data tells another story. With year-over-year home value losses continuing to accelerate, most areas of the country will see housing values get worse before they begin to stabilize.""
According to Zillow, the perception of property values by homeowners in the Northeastern part of the country were closest to reality, with a Misperception Index of only 3, down from 20 in the third quarter. Homeowners in the West, where values have been hardest-hit, lost some of their optimism by year-end, Zillow said. But as home values continued to spiral downward, it left homeowners there still disconnected from the real picture. The Misperception Index of Western homeowners came in at 13. Zillow's survey showed Southerners' perceptions to be the farthest from reality, with a Misperception Index of 14.