Every House’s Value is Dropping Except Mine!
By: Amy Bohutinsky, VP, Communications | August 6, 2008
It’s a topic dominating the headlines, news shows and the race for president. You’d have to be living under a rock to not know the housing market is in distress and home values are dropping…. right?
Apparently not - at least when it comes to our own homes. Today Zillow released our Q2 Homeowner Confidence Survey — asking more than 1,300 U.S. homeowners their perception of their own home’s current value, as well as what they think will happen with their home and local market in the coming 6 months. The results were eye-opening, to say the least…
- 62% of U.S. Homeowners believe their home’s value has increased or stayed the same in the past year. In reality, 77% of U.S. homes have declined in value over the past 12 months.
- People living in the West seem to be a little more realistic, with 44% believing their home’s value has increased (28%) or stayed the same (16%); however more homes in the West have lost value, with 88% of Western homes declining over the past year.
This chart breaks out the difference in homeowner perception vs. reality by region.
Looking into the future, homeowners continue to be optimistic — about their own homes, that is. Three out of four (75%) homeowners expect their home’s value will increase or stabilize in the coming 6 months. However, when asked about their local market, 42% think home values in their locality will decrease (compared to the 25% who think this about their own home). Clearly we think it’s the neighbor’s house that will be affected, not ours.
Unfortunately I’m not a psychologist to analyze what the heck is happening here… but it’s not a far stretch to call it denial. Or as my boss Spencer Rascoff said the other day — if you ask people if they have an above-average IQ, 90% of people think they do. Wishful thinking.
What do you think is driving this perception gap? And will it change in the coming months? We’ll let you know next quarter…
Meanwhile:
If you’d like to learn more about what’s happening in your local market, next week we’ll release our Q2 Real Estate Market Reports, which chart home value changes for 165 metropolitan statistical areas, the largest report of its kind. New this quarter, we’ll also look at % of homes sold for a loss, and % of home sales that were foreclosures. You can tune in to our Q2 Market Reports Conference Call on August 12 at 11am PT, to hear Dr. Stan Humphries discuss these reports as well as some more findings from today’s survey. To sign up for the Web version of this call, visit www.events.acttel.com/zillowmarketreports. Or, you can dial in directly at 1-800-240-2430.
- Stumble it!
- Categories: Real Estate, Real Estate Analytics, Zillow
Comments
17 Comments so far
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David on August 6, 2008 9:41 am
What is your survery selection method? I ask as selection bias could be in play here.
D. Lereah on August 6, 2008 11:19 am
Thanks for publishing this survey data.
Amy, in your closing paragraph above, you write: “new this quarter, we’ll also look at % of homes sold for a loss.”
Does this take into account 6% realtor fees? For example, if a $1M house sold for the same price paid last year, the seller actually lost $60,000 (at a minimum —- add in mortgage interest paid, taxes paid, maintenance costs, closing costs, opportunity costs of down payment, etc, etc).
Also, the commonplace practice of realtors re-listing properties distorts market conditions and the statistics reported by the NAR. Does Zillow take this deceptive re-listing practice into account? (Is it even possible for Zillow to do so?)
Brett on August 6, 2008 1:17 pm
Brett Shaw from Cyberhomes:
Wow, if this report is even remotely accurate, then it is a testament to what we as agents go through when discussing the proper list price with sellers. Doesn’t anyone know what the phrase “the market is down” means?
Amy B on August 6, 2008 2:41 pm
David (first comment),
There are two data components to this: The survey of homeowners and Zillow data on number of homes that have decreased in value. I believe you are referring to the survey of homeowners, which was conducted for Zillow by Harris Interactive. The survey was conducted online of 2,067 adults ages 18+, of whom 1,361 are homeowners. Our survey reported on responses from homeowners and the methodology used by Harris attempts to minimize any potential bias. I say minimize because no published polls come without some level of error. You can read the fine print of the methodology at the bottom of the press release here:
http://zillow.mediaroom.com/index.php?s=159&item=64
Amy B on August 6, 2008 3:37 pm
“D. Lereah” —
Our upcoming analysis (% of homes sold for a loss) considers the percentage of homes sold during Q2 that were sold for less than the prior purchase price; it does not factor in the costs of transacting. One could assume then that the total financial loss to those who sold for a loss could in fact be greater.
Re: re-listing properties – this analysis reports on closed transactions, not homes that are on the market. So days on market wouldn’t play into this analysis regardless.
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rorysiems on August 20, 2008 1:08 am
” * 62% of U.S. Homeowners believe their home’s value has increased or stayed the same in the past year. In reality, 77% of U.S. homes have declined in value over the past 12 months.
* People living in the West seem to be a little more realistic, with 44% believing their home’s value has increased (28%) or stayed the same (16%); however more homes in the West have lost value, with 88% of Western homes declining over the past year.” Above two points are quite right but there is nothing to be done with the real estate market. The market will speak of it’s own!
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