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Zillow Survey Shows Half of Homeowners Think Home’s Value Hasn’t Declined

Months of government bailouts and stock market volatility brought Americans' perception of the values of their own homes closer to reality than it was last quarter, but surprisingly half of U.S. homeowners still believe their home is insulated from the nation's home value declines, according to the ""Zillow"":http://www.zillow.com Q3 Homeowner Confidence Survey.
This quarter, 49 percent of homeowners said they think their own home's value has increased or stayed the same over the past year. However, nearly three-quarters (74 percent) of homes have lost value in the past 12 months, according to preliminary analysis of Zillow's Q3 Real Estate Market Reports.
Homeowners are not quite as confident as they were in the second quarter, when 62 percent said their homes either increased in value or remained the same, but a significant gap between the reality of home values and homeowners' perceptions persists, Zillow said. This is despite the timing of the survey - it was fielded from Oct. 7 to 9, during the worst week in stock market history.
Zillow's Home Value Misperception Index, which measures homeowners' perceptions of their home's value over time, shrank to 16 in the third quarter from 32 in the second quarter. An index of zero would mean homeowners' perceptions were in line with actual values.
Homeowners in the South and West had the most accurate perceptions of home values, while North Easterners' perceptions were most out of line with reality, Zillow reported.
Based on Zillow's third quarter survey, homeowners are slightly less optimistic about the future than they were last quarter, but believe the next six months will bring more stability to the housing market than the last 12. While slightly more than half (51 percent) of homeowners believed their home's value decreased over the last year, only 40 percent think it will decrease in the next six months. Another 40 percent believe their home's value will stay the same, while only 21 percent think their home's value will increase. This is slightly less optimistic than the second quarter, when 32 percent of homeowners predicted their home's value would increase in the next following months.
Homeowners were less optimistic about their neighbors' homes, with 57 percent saying home values in their local market will decrease over the next six months. In addition, fewer respondents are planning home-related investment over the next six months, Zillow said.
""After one of the most turbulent quarters in history for the U.S. economy and housing market, you'd expect the reality of dropping home values to start sinking in,"" said Dr. Stan Humphries, Zillow's VP of data and analytics. ""We are seeing some movement toward more accurate perceptions of home value declines, but there's still a significant gap between reality and perception.""
""We're seeing a fascinating distinction in consumer psychology,"" continued Humphries. ""On the one hand, homeowners appear to understand the reality of today's economy and are curbing their household spending, but on the other hand they still aren't ready to admit that these woes might extend to their own homes. There's clearly still some denial.""
To view Zillow's full survey results, ""click here"":http://zillow.mediaroom.com/index.phpxs=173.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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