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Sellers Who Bought Post-Bubble Guilty of Overpricing Homes; More Likely to Base Asking Price on Original Purchase Price, Rather Than Current Market Conditions

Buyers Who Bought During Bubble Years More Likely to Price Realistically, According to Zillow® Analysis and Survey

Jul 14, 2011

SEATTLE, July 14, 2011 /PRNewswire/ -- Current home sellers who purchased their home in 2007 or later are overpricing their homes by an average of 14.1 percent, according to analysis of for-sale listings on Zillow.

Meanwhile, sellers who originally purchased their homes before the run-up in home values and those who bought during the bubble also overprice their homes, but not by as much. Those who bought before 2002 price their homes about 11.6 percent over market value, and those who bought between 2002 and 2006 price their homes 9.3 percent above market value.

Zillow compared the asking price of 1 million for-sale homes with those homes' previous purchase price, then factored in the change in the Zillow Home Value Index at the ZIP code level to determine that home's current market value.

"Post-bubble buyers seem to believe they escaped the worst of the housing recession, as evidenced by how they price their homes today," said Zillow Chief Economist Dr. Stan Humphries. "But 2006 was just the beginning of the housing recession, and it is continuing in earnest to this day. That means that even people who bought after the bubble burst need to break out the pencil and paper and do serious research into what has happened in their market since they first bought their home, whether it was four years ago or six months ago.

"Overpricing homes causes them to stagnate on the market and keeps inventory from decreasing – not a desirable outcome for either the sellers or the market as a whole."

Zillow also surveyed homeowners who plan to sell their homes in the next four years. Those who purchased their home post-bubble(1) are more likely than bubble and pre bubble buyers to base their asking price on the original purchase price of their homes, with 17 percent saying the purchase price would be the primary factor in that decision, according to a survey(2).  This is despite the fact that home values have been falling since 2006, and are now down nearly 30 percent from the market's peak(3).

By comparison, 4 percent of those who purchased before the bubble and 9 percent of those who purchased during the bubble said the original purchase price would be the primary factor in determining their asking price. These are some of the results of a recent survey conducted online by Harris Interactive on behalf of Zillow among 4,879 U.S. adults aged 18 and over, of whom 613 were homeowners who plan to sell their home in the next 4 years.

About Zillow, Inc.

Zillow is a real estate information marketplace providing vital information about homes, real estate listings and mortgages through its website and mobile applications, enabling homeowners, buyers, sellers and renters to connect with real estate and mortgage professionals best suited to meet their needs. Zillow, Inc. operates Zillow.com®, Zillow Mortgage Marketplace and Zillow Mobile. With 22 million unique users of its website and mobile applications during May 2011, Zillow's goal is to help people make intelligent decisions about homes in every stage of their lives. -- home buying, selling, renting, remodeling and financing. The company is headquartered in Seattle.

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 is a registered trademark of Zillow, Inc.  Harris Interactive is a registered trademark of Harris Interactive Inc.

(1) Post-bubble buyers are defined as those who purchased their homes from 2007-2011. According to the Zillow Real Estate Market Reports, home values nationally reached a peak in June 2006 and began to fall. Bubble buyers are defined as those who purchased their homes from 2002-2006, and pre-bubble buyers as those who purchased their homes before 2002.
(2) This survey was conducted online within the United States by Harris Interactive on behalf of Zillow from March 30- April 1, 2011 and May 5-9, 2011 among 4,879 adults ages 18 and older, of whom 613 plan to sell their home in the next 4 years. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact Zillow.
(3) The Zillow Home Value Index has fallen 29.5 percent since the market peaked in June 2006.

SOURCE Zillow, Inc.


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