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Homeowner Confidence Rises Nationally, But Western Homeowners Remain Pessimistic Despite Stabilization in Many Western Markets

A Potential Five Million 'Sidelined Sellers' Very Likely to Put Homes on Market with Signs of Turnaround, According to Zillow® Q1 Homeowner Confidence Survey

May 20, 2010

SEATTLE, May 20 /PRNewswire/ -- As some parts of the U.S. housing market work their way out of the housing recession, while the majority of markets continue to decline, homeowners across the country had mixed opinions of the state of their own homes' values, according to the Zillow Q1 Homeowner Confidence Survey(1). Nationally, homeowners were overconfident, with half(2) (50 percent) believing their own home's value declined in the past year. In reality, 65 percent of U.S. homes declined in value, according to Zillow's Q1 Real Estate Market Reports.

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Meanwhile, 7 percent of homeowners, which translates to 5.3 million homes(3), said they would be "very likely" to put their home on the market in the next 12 months if they see signs of the housing market improving(4). By comparison, 5.2 million existing homes were sold during 2009(5). An additional 8 percent said they would be "likely" to put their home on the market, and another 14 percent said they would be "somewhat likely." These homeowners represent "sidelined sellers," a component of shadow inventory that if materialized, could significantly delay timing of a market recovery.

The most pessimistic homeowners reside in the West, even as home values in many California and Colorado metros have stabilized over the past year, according to the Zillow Q1 Real Estate Market Reports. Eighteen percent of Western homeowners believe that their home gained value over the past year when in reality 31 percent of Western homes gained value. That resulted in a Misperception Index(6) of -12 (a Misperception Index of zero would indicate that homeowner perception is in line with reality, and a negative Misperception Index indicates that homeowners are overly cynical about their own homes' values).

On the other end of the spectrum were Southern homeowners, who were overly optimistic, even as many Southern markets continue to see significant decreases in home values. Thirty-four percent of Southern homeowners said that their home gained value over the past year when in reality 27 percent of homes gained value. That resulted in a Misperception Index of 14.

Homeowners in the Northeast and Midwest recorded Misperception Indexes of -2 and 4, respectively.

Homeowner Perception by Region

 

Homeowner Perception of Home Value Change in Past Year by Region

US Q1 2010

Northeast

Midwest

South

West

 

My Home's Value Has Decreased

50%

38%

52%

46%

65%

 

My Home's Value Has Stayed the Same

23%

25%

29%

20%

18%

 

My Home's Value Has Increased

27%

37%

19%

34%

18%

 

Market Reality: Homes Reporting Year-over-Year Value Changes in Q1, according to Zillow

 

Actual Percent of Homes that Decreased

65%

56%

72%

67%

63%

 

Actual Percent of Homes that Stayed the Same (+/-1%)

7%

9%

7%

7%

7%

 

Actual Percent of Homes that Increased

28%

34%

21%

27%

31%

 

Q1 2010 Home Value Misperception Index

5

-2

4

14

-12

 

Q4 2009 Home Value Misperception Index

-2

-14

3

0

-5

 

Q1 2009 Home Value Misperception Index

6

12

3

8

3

 

Homeowner Perception of Own Home's Value in Next Six Months

 

My Home's Value Will Decrease

18%

10%

18%

18%

27%

 

My Home's Value Will Stay the Same

43%

39%

53%

41%

41%

 

My Home's Value Will Increase

39%

51%

29%

42%

32%

 

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

 
           

 

"It is clear that there is a lag between market realities and public perceptions of home values. For quite a while after the market peak, Western homeowners continued to believe their own homes' values were doing better than they were in reality," said Zillow Chief Economist Dr. Stan Humphries. "Conversely, after years of press coverage about declining home values, homeowner perceptions are now in line with market conditions from early last year, although the Western market has improved since then.

"We see the opposite phenomena in the South where home values in most markets – with the exception of Florida – took some time to begin falling. Many markets there have recently joined the housing recession in earnest, with five of the nine Southern states tracked by Zillow hitting their home value peak after 2007, but homeowners there are likely to believe the downturn has not affected them. This could also be a result of the fact that most attention has been on the hardest-hit areas of California, Florida, Nevada, Arizona and Michigan, and homeowners outside of these markets may have less information about what has happened in their local markets.  

"However, when homeowners across the country do start to believe that their home's value has stopped declining, we can expect to see a lot of new inventory entering the market via sidelined sellers. This added inventory, combined with current elevated inventory levels and continued high rates of foreclosure in many areas, will likely serve to keep home values treading near the bottom for several years. Inventory must come down for home values to go up."

Homeowner Perception of Future Home Values

Looking forward, homeowners are fairly positive about their own home's value over the next six months, but like Misperception Index, the degree of optimism varies wildly among regions. In the Northeast, more than half (51 percent) of homeowners believe their home's value will increase over the next six months while in the Midwest less than one-third (29 percent) of homeowners believe their home's value will increase. Nationally, 39 percent of homeowners believe their own home's value will increase during the next six months.

Full survey results and more information are available in the Zillow press room at http://zillow.mediaroom.com, or by emailing press@zillow.com

About Zillow.com®

Zillow.com is an online real estate marketplace where homeowners, buyers, sellers, renters, real estate agents and mortgage professionals find and share vital information about homes and mortgages. Launched in early 2006 with Zestimate® home values and data on millions of U.S. homes, Zillow has since added homes for sale and homes for rent, 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 10 million unique visitors per month, Zillow's goal is to help people become smarter about homes and real estate in every stage of their lives -- home buying, selling, renting, remodeling and financing. The company is headquartered in Seattle and has raised $87 million in funding.

About Harris Interactive

Harris Interactive is one of the world's leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us – and our clients – stay ahead of what's next. For more information, please visit www.harrisinteractive.com.

Zillow.com and Zilloware 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 April 5 and April 7, 2010 among 2,024 adults ages 18+, of whom 1,428 are homeowners. 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 and survey results, is available by contacting press@zillow.com.

(2) Unless otherwise indicated, all percentages are based out of homeowners who think the value of their home has increased, decreased or remained the same since this time last year. Percentages have been recalculated to exclude "not sure" or "don't know" and/or not applicable responses.

(3) According to the U.S. Census Bureau, there are 76 million owner-occupied homes in the United States, 7 percent of which is 5.32 million.

(4) The results for the question "If you saw signs of a real estate market turnaround in the next 12 months, how likely would you be to put your home up for sale?" were taken from a base of 253 homeowners who indicated some degree of likelihood to put their home up for sale in the next 12 months, if not already up for sale and if the real estate market turns around.

(5) Existing-home sales, according to the National Association of Realtors Jan. 25, 2010 press release.

(6) Zillow Home Value Misperception Index measures the gap between homeowner perception of changes in their home's value as reported in the quarterly Homeowner Confidence Survey conducted by Harris Interactive, and actual home value changes as reported by Zillow in its quarterly Real Estate Market Reports. The Misperception Index is calculated from an adjusted base of homeowners who think their home value changed – increased or decreased – and excludes "not sure" AND "remained the same" responses. The Index is the difference between those who think their home's value increased (35% adjusted, from survey) and the percent of U.S. homes that actually increased (30% adjusted, Zillow Q1 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 Q1 data is based on analysis of Q1 Real Estate Market Reports.

SOURCE Zillow.com


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