“Not My House!”

As you saw from Stan’s earlier post, home values continued to slide downward in the first quarter, falling more significantly than any quarter we’ve ever reported — down nearly 8% from a year ago.

Despite this trend and near-endless streams of news coverage on the subject, a lot of homeowners are still bullish about their home’s value. For the second quarter in a row, we released survey results conveying relatively high homeowner confidence that is pretty widely off from the market reality.

According to our survey, 72% of homeowners believe their home’s value has increased or stayed the same in the past year. Wishful thinking? Yes. We actually crunched the numbers and found as of Q1 the reality is: 75% of U.S. homes actually decreased in value from the same period a year ago.

While it seems many homeowners are moving closer to reality as 5% more respondents in Q1 said they think their home value has decreased in the past year than those surveyed in Q4 07, the gap is still surprisingly wide.

Does geography matter?
Homeowners in the Northeast have a better grasp on reality than those in other parts of the U.S. as 27 % of Northeast homeowners believe their home increased in value in the last year, which was in line with the actual increase (26% of homes). While more homeowners in the West accurately believe their home has decreased in value (37%), it’s wildly off from the actual 85% of homes that declined in value in the West the past year.

The map below highlights the break down across regions:

Why the gap?
Homeownership is one of the largest financial undertakings most people will ever experience and we expect there’s a fair bit of denial in these results as homeowners want to believe it’s not their home affected. We certainly hear this from real estate professionals currently working with sellers who insist on setting asking prices at the levels we saw 2-3 years ago. But, we think there’s a fair bit of inattention as well. Some homeowners are simply not paying close attention to the market because they don’t need to – they aren’t in the market to sell, buy, refinance or take out equity.
Zillow User More Aligned with Reality
Meanwhile, we also polled a few hundred Zillow users, asked the same questions and found what we’d likely expect: you are more informed about the real estate market than homeowners at large. In fact, pretty darn close. Based on our data, 19 percent of homes in the U.S increased in value in the past year and 18.8 percent of Zillow users said they believe their home increased in value. While there’s still a gap between Zillow users who believe their home’s value decreased and the market, it is considerably closer to reality than the general homeowner population.

We’re glad Zillow users are taking the initiative to stay informed on the housing market and your home’s value. The world would be a smarter place if everyone did.