Wednesday, October 29, 2008
There's a new poll up at the Zillow blog where homeowners all across the U.S. were asked what they think happened to the value of their home over the last year and what the year ahead might bring.
As expected, many homeowners remain blissfully unaware of the carnage that has recently occurred in the nation's housing market and are far too optimistic about what the future holds.
But, some of this is quite understandable - after all, we don't all obsess over this stuff.
If you've been in a place for years with no plans to move, haven't had the need to "tap" your home equity only to find less of it there, and don't see the need to keep track of what nearby houses sell for, you're probably not really qualified to offer an opinion on this anyway.
It's like asking someone who doesn't know or care about the S&P500 where stocks have come and where they're going. Despite what the National Association of Realtors might tell you, housing hasn't always been viewed as an investment by everybody - many people still look at their house as an asset that depreciates in real terms when upkeep, taxes, and insurance are factored in.
For those who do view their home as an investment, it's easier than ever to get some kind of an idea what real estate is worth with the rise of websites like Zillow. I became painfully aware of Zestimates after we sold our Southern California house a few years back, only to watch the Zestimate rise to $805,000 during the 2006 peak - it's now at $535,000.
Anyway, the survey data for how homeowners think home prices have moved over the last year is interesting, but, in my view, not all that surprisingly.
Here are the results by region:
And, a short excerpt:
There’s no doubt we’ve been deluged with depressing economic and housing news over the past few months. Every day is a new headline, every channel has a new pundit and the recession debate has shifted from “if” to “how long.”What was surprising about the survey was that optimism about the future is still quite strong, with 61 percent believing their home will maintain its value or increase over the next six months.
Given this, when fielding our Q3 Homeowner Confidence Survey earlier this month, we expected the results to be markedly different than last quarter, when 62% of homeowners thought their home’s value had increased or stayed the same (despite 77% of homes losing value). The Q3 Survey, fielded October 7-9 (the worst week in stock market history, by the way), asked homeowners their perception of their home’s value over the past year, and what they think will happen to their home’s value in the coming months.
The results — kind of baffling. While the perception gap did narrow, still half of U.S. homeowners do not think their home’s value has declined over the past year. Specifically:
* 32% think their home’s value increased in the past 12 months
* 17% think their home’s value held steady
* 51% think their home’s value declined
In reality, three-quarters (74%) of U.S. homes lost value in the past 12 months, according to Zillow’s Q3 data.
Only 49 percent felt this way about the last year, but in the period ahead, somehow people think things will improve.
Given what's been in the news for the last few months, that seems far too rosy a view for anyone, except of course for those people who have been living in a cave since August of last year.