Press Releases

Despite Turbulent Quarter, Half of U.S. Homeowners Do Not Think Their Home's Value Has Decreased

Prospective McCain Voters More Bullish on Own Home's Value, According to Zillow®Q3 Homeowner Confidence Survey

Oct 29, 2008

SEATTLE, Oct. 29 /PRNewswire/ -- Months of government bailouts and stock market volatility brought Americans' perception of the values of their own homes closer to reality than it was last quarter, but surprisingly half of U.S. homeowners still believe their home is insulated from the nation's home value declines, according to the Zillow Q3 Homeowner Confidence Survey(1).


This quarter, 49 percent of homeowners said they think their own home's value has increased or stayed the same over the past year. However, nearly three-quarters (74 percent) of homes have lost value in the past 12 months, according to preliminary analysis of Zillow's Q3 Real Estate Market Reports, which will be released Nov. 12.

Perception-Reality Gap Shrinks in Third Quarter, but Many Still Show "Not My Home" Sentiment

Homeowners are not quite as confident as they were in the second quarter, when 62 percent said their homes either increased in value or remained the same, but a significant gap between the reality of home values and homeowners' perceptions persists. This is despite the timing of the survey - it was fielded from Oct. 7 to 9, during the worst week in stock market history.

Zillow's Home Value Misperception Index(2), which measures homeowners' perceptions of their home's value over time, shrank to 16 in the third quarter from 32 in the second quarter. An index of zero would mean homeowners' perceptions were in line with actual values.

Homeowners in the South and West had the most accurate perceptions of home values. In the South, where 67 percent of homes decreased in value, the Misperception Index was 13. In the West, where 85 percent of homes declined in value, the Misperception Index was also 13. Northeasterners' perceptions were most out of line with reality: 71 percent of homes there lost value, and the Misperception Index was 20.

     Homeowner Perception
      of Home Value Change
      in Past Year        US 2008    Northeast   Midwest   South    West
  My Home's Value
   Has Increased            32%          36%       32%      34%     22%
  My Home's Value
   Has Decreased            51%          45%       51%      47%     65%
  My Home's Value
   Has Stayed the
   Same                     17%          19%       16%      19%     13%
     Market Reality: Homes Reporting Year-over-Year Value
              Changes in Q2, according to Zillow
  Actual Percent
   of Homes that
   Increased                21%          23%       22%      27%     12%
  Actual Percent
   of Homes that
   Decreased                74%          71%       72%      67%     85%
  Actual Percent
   of Homes that
   Stayed the
   Same (+/-1%)              5%           7%        6%       6%      3%
  Q3 Home
   Index(2)                 16           20        15       13      13
  Q2 Home Value
   Index                    32           29        31       36      23

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

McCain Voters Show More Confidence About Own Homes' Values Than Obama Voters

Homeowners who said they plan to vote for John McCain on Nov. 4 were slightly less realistic about their own homes' values over the past year and into 2009. But both McCain and Obama voters were over-confident, with only 50 percent of prospective McCain voters and 56 percent of prospective Obama voters saying their homes value had decreased over the past year. Almost three-quarters (74 percent) of homes across the country actually decreased in value(3).

Homeowners' Outlook for Next Six Months Gets Slightly More Conservative, Especially for Neighbors' Homes

Homeowners are slightly less optimistic about the future than they were last quarter, but believe the next six months will bring more stability to the housing market than the last 12.

While slightly more than half (51 percent) of homeowners believed their home's value decreased over the last year, only 40 percent think it will decrease in the next six months. Another 40 percent believe their home's value will stay the same, while only 21 percent think their home's value will increase. This is slightly less optimistic than the second quarter, when 32 percent of homeowners predicted their home's value would increase in the next following months.

Homeowners were less optimistic about their neighbors' homes, with 57 percent saying home values in their local market will decrease over the next six months.

  Fewer Planning Home-Related Investment in Next Six Months(4)
  --  Fewer expect to buy or sell a home in the near future. 3 percent said
      they plan to sell their home in the next six months, down from 5
      percent last quarter. Another 3 percent said they plan to buy a home,
      down from 4 percent in the second quarter.
  --  Fewer are planning home-related finance activity, with 5 percent
      planning to refinance or to take out a second mortgage or home equity
      loan in the next six months, down from 7 percent in the second
  --  53 percent are planning either major (like replacing the roof or
      remodeling the kitchen) or minor (like installing a new garbage
      disposal or painting) home improvements. Of those, 47 percent plan
      minor improvements and 15 percent plan major improvements.
  --  Many homeowners expect to spend less on home and non-home-related
      expenses in the near future. 35 percent said they would spend either
      somewhat or significantly less on home-related activities, like
      improvements, new appliances or decor, in the next 12 months.  16
      percent said they would spend significantly less. Only 3 percent
      expect to spend significantly more. Homeowners had similar responses
      when asked how they would spend during the 2008 holiday season, with
      52 percent saying they would spend less than last year, and 3 percent
      saying they would spend more.

"After one of the most turbulent quarters in history for the U.S. economy and housing market, you'd expect the reality of dropping home values to start sinking in," said Dr. Stan Humphries, Zillow vice president of data and analytics. "We are seeing some movement toward more accurate perceptions of home value declines, but there's still a significant gap between reality and perception. We're seeing a fascinating distinction in consumer psychology - on the one hand, homeowners appear to understand the reality of today's economy and are curbing their household spending, but on the other hand they still aren't ready to admit that these woes might extend to their own homes. There's clearly still some denial."

For full survey results, visit the Press Room, at

About® 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, Zillow, and Zestimate 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 Oct. 7, 2008 and Oct. 9, 2008
     among 2,021 adults ages 18+, of whom, 1,388 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 (38% adjusted, Harris Interactive data) and the
     percent of U.S. homes that actually increased (22% 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 Q3 Real Estate Market Reports.
  3. Percentage of homes losing value is calculated by Zillow from third
     quarter Real Estate Market Reports preliminary data.
  4. Homeowner percentage in this section includes those who said "do not
     know" or who declined to answer.

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