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Homeowner Perception Changing: Most No Longer In Denial About U.S. Housing Slide

Feb 11, 2009

Zillow® Q4 Homeowner Confidence Survey Shows Significant Homeowner Perception Change Over Past Six Months; However Most Think the Worst Has Passed and Home's Value Won't Decline in Early 2009


SEATTLE, Feb. 11 /PRNewswire/ -- American homeowners' perceptions of the value of their own homes moved more in line with reality at the end of 2008, at least when it came to hindsight. More than half (57 percent) believe their own home lost value during the year, according to the Zillow Q4 Homeowner Confidence Survey(1). This is markedly more than the 38 percent who believed their home's value was declining when asked during the second quarter of 2008.




In reality, 76 percent of all U.S. homes lost value in 2008, according to analysis of the Zillow Q4 Real Estate Market Reports. With these new findings, Zillow's Home Value Misperception Index(2) shrunk to 10 in the fourth quarter, from 16 in the third and 32 in the second quarter. An index of zero would mean homeowners' perceptions were in line with actual values.


Homeowners May Believe A Bottom Has Been Reached

However, when asked what the near future will bring for their homes, most homeowners expressed optimism, and appear to believe that the worst may be over. According to the survey, more than two-thirds (70 percent) of homeowners believe their home's value will either increase or stay the same in the first six months of 2009. Only 30 percent believe it will decrease.


"It's clear that the 'not my house' sentiment that was so prevalent in earlier surveys is waning, and homeowners are opening their eyes to the unfortunate reality of significant losses in home values across most of the country," said Dr. Stan Humphries, Zillow's vice president of data and analytics. "That said, there's a curious optimism for homeowners when asked about the future - most seem to believe we've hit a bottom and the worst has passed. Unfortunately, the data tells another story. With year-over-year home value losses continuing to accelerate, most areas of the country will see housing values get worse before they begin to stabilize."


Meanwhile, homeowners' optimism for the future does not extend to their neighbors' homes. While 70 percent of homeowners think their own homes' values will increase or stay the same in the first half of 2009, only 52 percent believe home values in their local market will increase or stay the same during the same time period. Nearly half (48 percent) think values in their local market will decrease, but only 30 percent believe the same will happen to their own homes.


Homeowners are still more optimistic about their local market than in the third quarter, however, when more than half (57 percent) said values in their local market would decrease in the next six months.



    Homeowner Perception by Region

    Homeowner Perception of Home
     Value Change in Past Year
     by Region              US 2008  Northeast  Midwest    South     West
    My Home's Value Has
     Decreased                57%       58%       58%       47%       70%
    My Home's Value Has
     Stayed the Same          18%       20%       20%       20%       11%
    My Home's Value Has
     Increased                25%       23%       22%       33%       19%
    Market Reality: Homes Reporting Year-over-Year Value Changes in Q4,
     according to Zillow
    Actual Percent of Homes
     that Decreased           76%       71%       73%       70%       90%
    Actual Percent of Homes
     that Stayed the Same
     (+/-1%)                   4%        6%        5%        5%        2%
    Actual Percent of Homes
     that Increased           20%       24%       22%       25%        9%
    Q4 Home Value
     Misperception Index      10         3         5        14        13
    Q3 Home Value
     Misperception Index      16        20        15        13        13
    Q2 Home Value
     Misperception Index      32        29        31        36        23
    Homeowner Perception of Own Home's Value in Next Six Months
    My Home's Value Will
     Decrease                 30%       30%       30%       26%       37%
    My Home's Value Will
     Stay the Same            43%       43%       46%       45%       38%
    My Home's Value Will
     Increase                 27%       27%       24%       29%       25%

    (NOTE: Column percentages may not total 100 percent due to rounding)

Northeasterners Have Firmest Grasp on Realities of 2008's Housing Market

With a Misperception Index of only 3 - down from 20 in the third quarter - the perception of homeowners in the Northeast was closest to reality. Well over half (57 percent) of Northeastern homeowners believe their own home's value declined during 2008, while 20 percent believed it stayed the same. According to Zillow's fourth quarter data, 71 percent of homes in the Northeast declined in value during 2008.


Homeowners in the West, where values were hardest-hit, lost some of their optimism in the fourth quarter, but home values continued to edge downward, leaving Western homeowners' perceptions among the farthest from reality with a Misperception Index of 13 (the same as last quarter). Southerners' perceptions were farthest from reality, with a Misperception Index of 14.


For more information or prior quarters' results, please visit the Zillow press room at, or email


About® is an online real estate marketplace where homeowners, buyers, sellers, real estate agents and mortgage professionals find and share vital information about homes and mortgages, for free. Launched in early 2006 with Zestimate® home values and data on millions of U.S. homes, Zillow has since added homes for sale, a directory of real estate and lending professionals, Zillow Advice and Zillow Mortgage Marketplace. One of the most-visited U.S. real estate Web sites, with more than seven million unique visitors per month, Zillow's goal is to help people become smarter about real estate in every stage of the home ownership process--home buying, selling, remodeling 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 and Zillow, and 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 between Jan. 6, 2009 and Jan. 8, 2009 among 2,271 adults ages 18+, of whom, 1,573 are homeowners. Unless otherwise indicated, all percentages have been recalculated 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 (31% adjusted, Harris Interactive data) and the percent of U.S. homes that actually increased (21% 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 analysis of Q4 Real Estate Market Reports.


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