The Majority of U.S. Homeowners Thinks Their Home is Insulated From the Housing Crisis
According to Zillow Q2 Homeowner Confidence Survey 62% of homeowners believe their home's value has increased or stayed the same in the past year yet 77% of U.S. homes actually declined in value
Short-Term Outlook: More optimism for own home vs. neighbors' homes in next six months although 70% say they are concerned foreclosures will decrease home values in their market within next year; 56% planning home improvements
Aug 6, 2008
SEATTLE, Aug. 6 /PRNewswire/ -- Despite widely covered housing woes and significant market data to the contrary, homeowners reveal high confidence in the value of their own home with even greater optimism for the next six months, according to the Zillow® Q2 Homeowner Confidence Survey(1) of 1,361 U.S homeowners conducted by Harris Interactive®. Highlights of the survey are below.
"Not My House!" Sentiment Showcases Wide Homeowner Perception-Reality Gap Nearly two out of three (62%) homeowners think their home value has increased or remained the same in the past year. Unfortunately, the reality of the market is not quite as bright; in fact, it's getting worse. Seventy-seven percent of U.S. homes lost value in the past 12 months, according to preliminary analysis of Zillow's Q2 Real Estate Market Reports, due to be released August 12, while only 19 percent increased and 5 percent remained the same. Whether it's apathy, confusion or just plain denial, homeowners seem to believe the housing crisis affects every other home but "not my house," underscoring a wide gap between homeowners' inflated perception of their home values and the gloomy market reality.
To monitor this perception-reality gap over time, Zillow has created the Home Value Misperception Index, which is the difference between the adjusted percentage of homeowners who believe their home value increased over the past year and the adjusted percentage of homes that have increased in value(2). Nationwide, the Q2 Home Value Misperception Index is 32, reflecting this broad gap. Those in the West, which has the highest proportion of homes (88%) that declined in value during the quarter, seem to have the best grasp on reality with a Misperception Index of 23, while those in the South have the widest gap at 36.
Homeowner Perception of Home Value Change in Past Year US 2008 Northeast Midwest South West My Home's Value Has Increased 40% 39% 39% 48% 28% My Home's Value Has Decreased 38% 38% 39% 28% 56% My Home's Value Has Stayed the Same 22% 23% 22% 23% 16% Market Reality: Homes Reporting Year-over-Year Value Changes in Q2, according to Zillow Actual Percent of Homes that Increased 19% 20% 18% 26% 9% Actual Percent of Homes that Decreased 77% 74% 77% 69% 88% Actual Percent of Homes that Stayed the Same (+/-1%) 5% 5% 5% 6% 3% Home Value Misperception Index(2) 32 29 31 36 23 (NOTE: Column percentages may not total 100% due to rounding)
More Optimism for Own Home vs. Neighbors' Homes in the Short-Term: Homeowner short-term outlook is even more optimistic than current perception as three out of four (75%) homeowners expect their home value will increase or stay the same over the next six months, with 25 percent expecting a decline. The same level of optimism doesn't extend to neighboring homes, however, as 42 percent expect values in their local market to drop and 58 percent think values will increase or remain the same.
More Foreclosures Expected Yet Half Oppose Government Bailout for Those Facing Foreclosure: Four in five homeowners (82%) expect to see more or about the same amount of foreclosures in the next six months as they did in the last six. Already, more than nine out of 10 (92%) of all homeowners(3) say there have been foreclosures in their local real estate market. Of these, 70 percent are at least somewhat concerned that foreclosures will decrease home values in their local market within the next year. Despite these concerns, nearly half of all homeowners (48%) say homeowners who are currently facing foreclosure because they took out an adjustable rate mortgage or other loan that they can no longer afford should not receive government assistance to stay in their homes. Only 28 percent support government intervention and 24 percent "don't know."
Two-thirds (64%) of Homeowners Planning Home-Investment Activities in Next Six Months:
-- 56% are planning major (e.g. replace the roof, remodel the kitchen) and/or minor (e.g. install new garbage disposal, repaint or wallpaper a room) home improvements, with 17 percent planning major improvements and 49 percent planning minor ones. Of interest is how the perceived change in home value can impact home investment plans. Homeowners who believe their home has increased in value are significantly more likely to plan major home improvements (22%) than those who believe their home's value has decreased (14%).
-- 7% are planning home financing activity [refinance their mortgage (5%), take out a home equity line (2%), or take out a second mortgage (1%)]
-- 7% are planning to buy or sell a primary or secondary residence [sell their home (5%); buy a new primary or secondary residence (4%)]
"Our survey reveals a wide gap between the perception homeowners have about their own home's value and the realities of a market in which three-quarters of homes declined in value in the past year. We attribute this gap to a combination of inattention and a fair bit of denial that causes people to believe their home is insulated from the woes of the market that affect others, but not them," said Dr. Stan Humphries, Zillow vice president of data and analytics. "This sentiment is also carried through in homeowner confidence for the short-term as more people expect their home to perform better in the next six months than the market and recent past. Although many homeowners may believe the worst is over, we think this level of optimism is out of sync with actual market performance."
Zillow Q2 Conference Call: To join, dial toll free: 1-800-240-2430: Join Zillow's VP of Data and Analytics Dr. Stan Humphries on Tuesday, August 12 @ 11:00 AM PDT to discuss the Homeowner Confidence Survey in concert with second quarter housing analysis. Register to participate in live online presentation http://www.events.acttel.com/zillowmarketreports.
Zillow.com is an online real estate community where homeowners, buyers, sellers, real estate agents and mortgage professionals find and share vital information about homes, for free. Launched in early 2006 with Zestimate values and data on millions of U.S. homes, Zillow has since opened the site to community input, data and dialogue. One of the most-visited U.S. real estate Web sites, Zillow's goal is to help people become smarter about real estate in every stage of the home ownership process -- buying, selling, home improvement and financing. The company is headquartered in Seattle and has raised $87 million in funding.
About Harris Interactive
Harris Interactive is a global leader in custom market research. With a long and rich history in multimodal research that is powered by our science and technology, we assist clients in achieving business results. Harris Interactive serves clients globally through our North American, European and Asian offices and a network of independent market research firms. For more information, please visit http://www.harrisinteractive.com/.
Zillow.com and Zillow are registered trademarks of Zillow, Inc. Harris Interactive is a registered trademark of Harris Interactive Inc. (1) The survey was conducted online by Harris Interactive within the United States on behalf of Zillow.com between June 30, 2008 and July 2, 2008 among 2,067 adults ages 18+, of whom, 1,361 are homeowners. Unless otherwise indicated, all data have been re-percentaged to exclude "not sure" or "don't know" responses. This online survey is not based on a probability sample and therefore no estimates of theoretical sampling error can be calculated. A full methodology, including weighting variables, is available. (2) The Home Value Misperception Index is calculated from an adjusted base of homeowners who think their home value has changed -- increased or decreased -- and excludes "not sure" AND "remained the same" responses. The Misperception Index is the difference between those who think their home's value increased (51% adjusted, Harris Interactive data) and the percent of U.S. homes that actually increased (19% adjusted, Zillow data) in value year-over-year on an adjusted base of home values that changed by more or less than one percent (excludes homes that remained the same within one percent). Zillow data is based on preliminary analysis of Q2 Real Estate Market Reports and individual Zestimate(r) valuation of nearly 70 million U.S. homes. (3) Data have NOT been re-percentaged to exclude "don't know" responses. When asked if they think foreclosures in their local real estate market have decreased their home's current market value, 33% said "yes," 33% said "no," 26% said "don't know," and 8% indicated "There are no foreclosures in my local real estate market."
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk, email@example.com
SOURCE: Zillow, Inc.
CONTACT: Sarah Mann of Zillow, Inc., +1-206-757-2701, firstname.lastname@example.org
Web site: http://www.zillow.com/