DSNews The homepage of the servicing industry
American homeowners have historically been particularly sanguine about real estate values, making their perceptions far from the reality of late, particularly when asked about their own homes. But the severity[IMAGE]of the housing downturn appears to be finally setting in for homeowners nationwide, according to a new report from real estate data provider ""Zillow"":http://www.zillow.com.
American homeowners' confidence in their own homes' values has fallen to the lowest level on record, Zillow said Thursday. Just one in five homeowners believe their property value increased during 2009, but Zillow says in fact, 28 percent of homes appreciated during the year. It's the first time in the history of the Seattle-based company's survey that such a large percentage of homeowners have underestimated their home's value.
The Zillow Home Value Misperception Index was -2 in the fourth quarter. A Misperception Index of zero would mean homeowners perceptions' were in line with actual values. The closest it’s ever come to that until now, was in the second quarter of 2008, when the index was at 32.
Zillow says a negative Misperception Index indicates that homeowners are “overly cynical†about their own homes' values when compared with reality. This is the first time the national index was negative.
Based on ""Zillow’s survey"":http://zillow.mediaroom.com/index.php?s=173, half of homeowners believe their own homes lost value during 2009, while 30 percent believed their homes' values stayed the same. In reality, the company said, 65 percent of homes lost value during the year, and values remained the same for 7 percent.
[COLUMN_BREAK]The results demonstrate the ""not my home"" sentiment that was once prominent among American homeowners has faded. Zillow says one year ago, nearly half (47 percent) of homeowners believed values in their local market would decrease in the next six months. However, when asked about their own home, fewer than one in three (30 percent) believed their own home's value would decrease.
Now that gap has shrunk, with 22 percent of homeowners believing their local market will lose value over the next six months and 14 percent believing their own home will lose value.
""Homeowners are finally succumbing to the notion that, in most areas, declining home values over the past year are no longer the exception, they are the rule,"" said Dr. Stan Humphries, Zillow chief economist.
However, Humphries noted that almost three times as many people currently believe their home's value will increase over the next six months as believe it will decrease in value â€" a level of optimism he says is likely to outpace actual performance in the near-term.
Humphries says given recent news about the stabilization of home values in some markets, it’s easy to understand why some homeowners are optimistic. “However, home values in many markets are still under substantial downward pressure from high levels of foreclosures and we don't believe we'll see a definitive bottom nationally until the second quarter of this year. We're not out of the woods yet,"" he warned.
According to ""Zillow’s quarterly survey"":http://zillow.mediaroom.com/index.php?s=173, homeowners in the northeastern and westerners parts of the country are the most cynical about their own homes' values.
Three-quarters (78 percent) of Northeastern homeowners said their home lost value or stayed the same in the past year when just over half (58 percent) of the homes actually did.
Western homeowners, who last quarter were the most optimistic and the least aligned with reality, did an about-face in the fourth quarter. They now are slightly cynical with a Misperception Index of -5, Zillow said.
