SEATTLE, July 26, 2012 /PRNewswire/ -- If faced with a deeply underwater mortgage, most economists and homeowners agree they would not strategically default, according to dual surveys from Zillow®.

Nearly three-quarters of economists surveyed in the June 2012 Zillow Home Price Expectations Survey (71 percent) said they would not strategically default, even if they owed on their mortgage at least 40 percent more than the current value of their home.

The survey, sponsored by leading real estate information marketplace Zillow, Inc. (NASDAQ: Z) and conducted by Pulsenomics LLC, was compiled from 114 responses from a diverse group of economists, real estate experts and investment and market strategists. The main portion of the survey, which captures respondents' expectations concerning the future of home prices, was released last month.

In a separate Zillow survey conducted by Ipsos®, 59 percent of homeowners said they would not make the decision to strategically default if they were underwater on their home by more than 40 percent[i]. Nearly 75 percent of homeowners in the U.S. with an underwater mortgage are underwater by 40 percent or more, according to Zillow's first quarter Negative Equity Report[ii].

"We were initially surprised that so few economists would be willing to strategically default, since when you do the math, it can often be the best economic choice, if you leave aside moral and ethical considerations," said Zillow Chief Economist Stan Humphries. "Of course, strategic default is not just a mathematical decision. The most common reason for avoiding strategic default cited by homeowners was that it is a moral issue. That likely comes into play with economists and analysts, as well."

Thirty-seven percent of homeowners who said they would not strategically default cited moral reasons, while 35 percent indicated it didn't make sense given that they intended to live in their current home for a long time.

The Zillow Home Price Expectation Survey additionally asked the same group of economists and housing analysts their stance on the adoption of government-sponsored mortgage principal forgiveness initiatives for underwater borrowers. The survey found that 72 percent of respondents opposed any adoption of such programs, while 28 percent were in favor.

"These survey results suggest that economic and financial considerations are not the dominant drivers of behavior for even deeply underwater borrowers," said Pulsenomics Founder Terry Loebs.  "This underscores the challenges in valuing underwater mortgages and in determining the costs and benefits of principal forgiveness initiatives."

The June 2012 survey is the 14th edition of the Home Price Expectations Survey, and it was conducted from May 31-June 14, 2012, by Pulsenomics LLC on behalf of Zillow, Inc.

About Zillow:

Zillow (NASDAQ: Z) is the leading 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. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 150 markets at Zillow Real Estate Research. Zillow, Inc. operates Zillow.com®, Zillow Mortgage Marketplace, Zillow Mobile, Postlets®, Diverse Solutions™ and RentJuice®. The company is headquartered in Seattle.

Zillow.com, Zillow, Postlets and RentJuice are registered trademarks of Zillow, Inc. Diverse Solutions is a trademark of Zillow, Inc.

About Pulsenomics:

Pulsenomics LLC is an independent research and consulting firm that specializes in data analytics, new product and index development for institutional clients in the financial and real estate arenas.  Pulsenomics also designs and manages expert surveys and consumer polls to identify trends and expectations that are relevant to effective business management and monitoring economic health.

Ipsos is a registered trademark of Ipsos SA.

[i] These are some of the findings of an Ipsos poll conducted July 2 – 3, 2012. For the survey, a nationally representative sample of 2,009 randomly-selected adults aged 18 and over residing in the United States was interviewed via Ipsos' U.S. online omnibus. With a sample of this size, the results are considered accurate within ±2.2 percentage points 19 times out of 20, of what they would have been had the entire population of adults in the United States been polled. The margin of error will be larger within subgroupings of the survey population. Most of this data relies on a subgroup of the sample (i.e., homeowners), with a sample size of 1,409 and a margin of error of ±2.6 percentage points 19 times out of 20. These data were weighted to ensure the sample's regional and age/gender composition reflects that of the actual U.S. population according to data from the U.S. Census Bureau. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error and measurement error.

[ii] The data in the Zillow Negative Equity Report incorporates mortgage data from TransUnion, a global leader in credit and information management, to calculate various statistics. The report includes, but is not limited to, negative equity, loan-to-value ratios and delinquency rates. To calculate negative equity, the estimated value of a home is matched to all outstanding mortgage debt and lines of credit associated with the home, including home equity lines of credit and home equity loans. All personally identifying information ("PII") is removed from the data by TransUnion before delivery to Zillow. Overall, this report covers over 800 metros, 2,100 counties and 22,200 ZIP codes across the nation.

SOURCE Zillow