Homes worth more than owners think

SEATTLE – Feb. 18, 2010 – American homeowners’ confidence in their own homes’ value during the fourth quarter fell to its lowest level in seven quarters, with just one in five (20 percent) believing their own homes’ values increased during 2009, according to the Zillow Q4 Homeowner Confidence Survey.

However, the survey finds that 28 percent of homes increased in value during 2009. The disconnect between rising values and lower homeowner expectations led a Home Value Misperception Index of negative two (-2).

A Misperception Index of zero would mean homeowners’ perceptions were in line with their homes’ actual values. A positive index means homes are worth less than owners think; a negative index indicates that homeowners are overly cynical about their own homes’ value.

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 that their own home’s value would decrease.

Today 22 percent of homeowners believe 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. “Almost three times as many people believe their home’s value will increase over the next six months as believe it will decrease in value, a level of optimism that is likely to outpace actual performance in the near-term. Given recent news about the stabilization of home values in some markets, I can see why homeowners are so 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.”

Top read the complete survey, visit Zillow’s website.

© 2010 Florida Realtors®